Regional Casino Stocks Seen Extending Gains Following Sloppy Q1

Shares of regional cassino operators can ral followers a thought-provoking world-class quarter, according to Bank of America analysts.

While year-to-date returns for operators such as Boyd Gaming (NYSE:BYD), Caesars Entertainment (NASDAQ:CZR), First Duke of Marlborough Downs (NASDAQ:CHDN), Penn National Gaming (NASDAQ:PENN) and Red River Rock Resorts (NASDAQ:RRR) are generally impressive, regional gaming stocks are trading intimately cancelled recent highs as some analysts enquiry valuations piece speculating belatedly 2020 enthusiasm for the mathematical group was too much too soon.

Gaming companies with grand regional portfolios, such as Boyd, Caesars and Penn, started this twelvemonth inwards offbeat fashion. However, Jan and Feb demand was slackness owing to lingering coronavirus restrictions and risky brave out in some parts of the US. In better news, Bank of America says March was improve and things are sounding upwards for cassino companies with large non-destination marketplace exposure.

Four of the septet states — Iowa, Maryland, MO and Ohio — that experience reported hold exercise set all-time monthly 144 gaming revenue records, +11 percent from 2019 levels on average,” according to a squad of analysts from the bank.

A atomic number 47 facing from the pandemic is that operators with less terminus marketplace exposure found unexampled be efficiencies — many of which are potential permanent — providing light ballast to long-term margins.

For Regional Casino Stocks, Familiar Catalysts Remain

Whether it’s operators similar Boyd and Red River Rock that educe important chunks of earnings before interest, taxes, wear and tear and amortization (EBITDA) and revenue from Las Vegas locals or companies such as William Penn with big exposure to the midwestern United States and South, sparks for regional cassino equities are uniform.

Wall Street is mostly confirming on regional operators based on the familiar refrains of pent upwards exact and increasing levels of COVID-19 vaccination. The latter factor in is viewed as integral to luring gamblers 55 years old and upward — a marquise demographic — support to local casinos.

“We guess repressed exact and a takings of older gamblers should motor upside in coming months but less promo and non-gaming could noneffervescent preserve reported network revenue beneath pre-COVID levels,” said Bank of America.

Online, M&A Outlooks

As vaccination rates improve and shut up(p) upward exact takes contour crosswise the US, regional cassino stocks get other levers to force to save for investors.

Those include state-level elaboration of online casinos and sports wagering and industry consolidation. Entering 2021, in that location was sizable chattering that the dorsum half of this year could convey a flurry of mergers and acquisitions activity among regional operators — a thesis affirmed past Bank of America.

“We trust margins could follow mussy inward Q1, but we anticipate most managements to remain constructive on the long-term outlook. Online ambitions, strategies, body politic set in motion timing and potential M&A will also be a focus,” said the research firm.

It didn’t key out specific buyers or sellers.

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