Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Wynn Resorts
Wynn Resorts’s third-quarter results were looked on mostly favorably by Wall Street analysts.
Jefferies equity analyst David Katz Nov. 10 wrote, “The solid performance in Las Vegas coupled with the strong, albeit uneven recovery in Macau suggests that the progression of estimates continues and the deleverage of the business continues, with an early-stage growth project underway. We consider these positives to be generally balanced with the market headwinds in Asia, which continue to limit the performance of the shares, and reiterate our Hold.”
J.P. Morgan’s Joseph Greff Nov. 9 wrote, “Wynn’s solid 3Q23 EBITDA results, with property level EBITDA of $530 million (were) 5% above our estimates and 4% above consensus. Adjusting for normal table games hold in both Las Vegas (which was higher than normal and aided by $12 million) and Macau (high in VIP, but more than offset by lower-than-normal mass hold, and netted to a negative $11 million EBITDA impact), it was basically a wash.
Light & Wonder
“Light & Wonder’s third quarter AEBITDA “was +8%/+10% ahead of us/Street, with strength across all segments,” wrote Truist Securities analyst Barry Jonas in a Nov. 10 report. “We expected a strong quarter and commentary, but note roughly half of the beat to us was one-timers/pushed out litigation costs. importantly, management reiterated its 2025 $1.4 billion AEBITDA target while outlining specific drivers. We increase our 4Q23/2024E AEBITDA by +8%/+2% and maintain our $1.4 billion 2025E. We remain Buy as Light & Wonder continues to be one of the better growth stories in gaming rated with widening investor support (recent ASX 200 index inclusion). We increase our PT to $88 from $86.
New York online sports betting
P. Morgan’s Greff Nov. 9 issued a report about the New York Gaming Commission October’s “online sports betting gross revenues (so before tax and promotions) of $166 million on handle of $2.01 billion, implying a market-wide hold rate of 8.3% (down 115 bps year-over-year). On a year-over-year basis, handle was up 30% and revenues were up 14%. We note that FanDuel generated a record handle that was 31% higher sequentially versus September, 21% above its prior record in March of 2023, and higher than the market on a relative year-over-year growth basis, which we suspect could be due to higher promotional investments or increased VIP activity.”
Churchill Down
Truist Securities’ Jonas Nov. 8 discussed the rejection by voters of two Churchill Downs’s projects in Virginia: the Richmond class III casino resort joint venture with Urban One and the Manassas Park historical racing machine gaming venue. “While disappointing, we don’t think investors were ascribing much value to these referendums given the voting history of the Richmond electorate and general materiality. We think the recently reinstituted ban on gray games in VA and completed Exacta transaction should bolster Churchill Downs’ already strong position in the state. Overall, we see the Virginia election outcome as not thesis changing, while we also see the re-election of Governor (Andy) Beshear in Kentucky as a positive for the company.”
