Boyd Gaming Inventory Is Sizzling, However Underappreciated, Says Analyst
Posted on: Could 28, 2021, 12:47h.
Final up to date on: Could 28, 2021, 03:03h.
Up 52.31% year-to-date, Boyd Gaming (NYSE:BYD) inventory is a star amongst gaming equities. However at the least one analyst says the on line casino operator might not be getting all of the adulation it deserves.
In a brand new notice to purchasers, Stifel analyst Steven Wieczynski reiterates a “purchase” ranking on the Sam’s City operator, whereas lifting his value goal on the title to $82 from $80. That means upside of about 28 p.c from the Could 27 shut. The analyst’s report follows investor day conferences with Boyd executives, together with CFO Josh Hirsberg.
We stroll away impressed with BYD’s execution, and to us, it appears traits throughout their Las Vegas Locals (LVL) and regional segments proceed to be strong,” mentioned Wieczynski.
The Las Vegas-based firm runs 28 gaming venues throughout 10 states, together with 11 in its residence metropolis. A number of of Boyd’s Sin Metropolis venues stay shuttered. However Nevada COVID-19 on line casino restrictions might be a thing of the past on June 1, and site visitors traits are bettering in downtown Las Vegas, the place Boyd is the highest operator.
Wieczynski says the massive query that must be answered is how a lot of Boyd’s newly gained clientele is sticky, and the way sustainable that enterprise is. It’s a troublesome question to reply at this juncture. However executives instructed the analyst that lots of the firm’s rated gamers haven’t returned, and once they do, that may offset losses amongst newer, fleeting gamblers.
A Good Time to Contemplate Boyd Inventory
A 9.57 p.c achieve this week however, Boyd inventory not too long ago joined different gaming names to the draw back, shedding virtually 9 p.c from its April peak.
Nonetheless, shares of the Orleans operator are largely favored on Wall Avenue, with analysts highlighting industry-leading margin expansion, power in regional markets, pent-up demand from the 55+ demographic, and an typically missed sports activities betting story. Mixed, these components might make it a great time to revisit Boyd inventory, notably with it off its current highs.
“We imagine now is a good time to be doing work on this story. What we proceed to love essentially the most concerning the BYD story within the close to time period is that it doesn’t have as a lot danger related to the sports activities betting/iGaming euphoria,” mentioned Wieczynski.
Boyd owns 5 p.c of FanDuel, giving it a low-risk avenue into the proliferation of sports activities wagering within the US, and a doable monetization device ought to Flutter Entertainment spin-off the sportsbook operator.
Extra Causes to Like Boyd
Whereas many regional on line casino shares are gaining popularity of margin enhancements within the wake of the coronavirus pandemic, the difficulty now turns into: can operators keep these lofty margins and maintain them at or above 2019 ranges?
Wieczynski believes Boyd can do exactly that, and even construct on current margin enhancements. Mix that with seniors getting vaccinated and returning to casinos, and the FanDuel “name possibility,” and Boyd stays one of the catalyst-rich names within the gaming trade.
“Each catalyst we identified ought to assist drive free money move increased,” mentioned the analyst. “We imagine BYD can generate ~$4/share per yr transferring ahead, which ought to enable them to start out shopping for again shares once more or deliver again the dividend. We imagine BYD will finish the yr with internet leverage round 4x.”