Boyd Gaming (NYSE: BYD) inventory is on a tear this yr, hovering 20.92%. However there could possibly be upside to that efficiency because of power in regional casinos.
Boyd Gaming’s Fremont Lodge On line casino in downtown Las Vegas. A JPMorgan analyst is bullish on Boyd inventory. (Picture: Vegas Eater)
In a word to shoppers Monday, JPMorgan analyst Joseph Greff reiterated an “obese” ranking on the Orleans operator, with a $75 worth goal. That means upside of 13.65 from immediately’s shut. As is the case with so many on line casino equities, Boyd’s share worth could possibly be pushed extra by the broader economic system than its personal sturdy fundamentals.
Whereas we proceed to see BYD’s share worth (in addition to the remainder of our protection universe’s) buying and selling extra on macro tendencies (versus company-specific ones) within the close to time period, we see BYD as (not less than) a relative outperformer inside our U.S. gaming universe,” wrote Greff.
The JPMorgan analyst additionally applauded Boyd for its sturdy stability sheet and dedication to shareholder rewards, together with share buybacks. On the finish of final yr, the operator had $283.5 million money available. In February, it introduced an virtually 7% improve in its quarterly dividend.
Regional, Las Vegas Duopoly Advantages
Boyd runs 10 gaming venues in its residence market, together with Aliante, California, Cannery, Fremont, Gold Coast, Jokers Wild, Most important Avenue Station, Sam’s City, Suncoast, and The Orleans.
Greff known as the coveted Las Vegas locals market “successfully a duopolistic market with a comparatively higher demand setting.” That implied duopoly is Boyd and rival Pink Rock Resorts (NASDAQ: RRR), and it’s arduous to argue with that assertion, as these two companies mix to run greater than 20 casinos within the Las Vegas Valley.
Nonetheless, the most important distinction between the 2 is Boyd has operations in a number of states exterior of Nevada — a trait not sported by Pink Rock. That’s to the advantage of the previous as a result of Greff expects Boyd to publish first-quarter income of $440 million from its Midwest, South, and West operations, up from a forecast of $414 million.
The analyst additionally modeled $14 million in gross sales from Boyd’s digital unit and $15 million in administration charges. The latter is tied to the corporate’s administration settlement with a tribal on line casino in Northern California.
Different Boyd Advantages
The Suncoast operator continues sporting wholesome working margins and sturdy free money flow-generating capabilities, that are being directed to traders by buybacks and dividends. Final yr, Boyd allotted $600 million to shareholder rewards, shopping for again $107 million of its inventory within the fourth quarter alone. The corporate mentioned it has $239 million remaining on beforehand introduced repurchase packages.
As for the operator’s Las Vegas locals and downtown casinos, that group is proving regular, although not essentially overwhelming for the time being.
“That phase is “undemanding … nor have we modified our 2Q23-through-2024 estimates, and nonetheless see a comparatively wholesome and secure gaming client, with the one authentic nit being the state of the low-end client,” concluded Greff.
