• Thu. Sep 23rd, 2021

Boyd Gaming Close to-Time period Outlook Tough, However Lengthy View Is Shiny, Says Analyst


Jan 25, 2021

Posted on: January 24, 2021, 12:44h. 
Final up to date on: January 24, 2021, 02:42h.

Todd Shriber Learn Extra

Boyd Gaming (NYSE:BYD), one of many dominant operators in downtown Las Vegas, may very well be challenged over the near-term due to the lingering coronavirus pandemic. However its long-term outlook is compelling.

The Orleans Area at Boyd’s Orleans Las Vegas. An analyst sees long-term promise within the inventory. (Picture: KTNV)

These are the emotions of Stifel analyst Steven Wieczynski, who, in a be aware to purchasers final Friday, lowered estimates on the regional gaming firm. He did so whereas reiterating a “purchase” ranking and lifting his worth goal to $60 from $54. That suggests upside of almost 20 p.c from the Jan. 22 shut.
The analyst estimates the Orleans and Sam’s City operator will earn $1.70 a share on income of $2.77 billion this yr, and $2.71 on turnover of $3.10 billion in 2022. Due to  COVID-19 restrictions, casinos throughout the US are working at restricted capability, constraining near-terms earnings potential.

We’re decreasing our near-term estimates to account for softer visitation patterns witnessed in 4Q20, and, to this point, in 1Q21, given heightened COVID restrictions which were carried out throughout lots of BYD’s working markets,” stated Wieczynski. “We imagine till virus instances begin to plateau and the vaccination progress accelerates, many states will proceed to limit social gathering venues (together with casinos).”

Buyers are at peace with the pandemic’s affect on Boyd inventory, because the identify is up 16.71 p.c year-to-date and 129 p.c over the previous six months.
Be Affected person with Boyd
Boyd operates 29 casinos in 10 states, together with 11 in its house market of Las Vegas. A number of of the corporate’s Sin Metropolis venues stay shuttered, owing to the coronavirus disaster.

On the intense facet, Wieczynski sees value financial savings realized by Boyd having optimistic, everlasting results. The analyst additionally notes that as extra people within the 55+ age demographic obtain vaccines, a tidal wave of pent-up demand will probably be unleashed, benefiting Boyd within the course of.

“Longer-term, we proceed to imagine spending/visitation traits will stay comparatively wholesome (as soon as the nation goes again to regular) throughout the vast majority of BYD’s working markets, whereas their diminishing value construction ought to finally enable for higher circulate via,” stated Wieczynski. “We imagine a variety of the associated fee saves which were achieved throughout COVID-19 ought to show everlasting, whilst sure revenues come again on-line.”
The analyst notes traders are coming to phrases with the truth that the primary six months of 2021 may very well be tough on gaming corporations when it comes to site visitors and visitation traits, including that market members are specializing in the again half of the yr.
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Nowadays, traders are obsessed with sports activities betting equities. Boyd isn’t essentially the most direct play on that theme. However its publicity shouldn’t be missed.
“We imagine BYD’s method may show a much more environment friendly use of capital, because it sits again and collects a share of income generated via its licenses without having to interact in what’s prone to develop into a fierce promotional battle for market share,” notes the Stifel analyst.
Boyd owns 5 p.c of FanDuel. Ought to Flutter Leisure Plc (OTC:PDYPY), which owns the rest of FanDuel, spin out that enterprise at a valuation much like that of DrafKings (NASDAQ:DKNG) — roughly $20 billion — that might worth Boyd’s stake at $1 billion. That’s a wholesome proportion of the on line casino operator’s market capitalization of $5.56 billion.

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