Boyd Gaming on Right Track, Has Catalysts, Says Analyst

Posted on: February 17, 2021, 10:08h. 

Final up to date on: February 17, 2021, 11:29h.

Shares of Boyd Gaming (NYSE:BYD) are buying and selling decrease Wednesday. That’s regardless of a better-than-expected fourth-quarter earnings report and bullish feedback from some sell-side analysts.

Boyd Gaming
The Aliante On line casino Resort Las Vegas. An analyst is bullish on operator Boyd’s prospects. (Picture: YouTube)

On Tuesday afternoon, the Orleans operator mentioned it earned 73 cents a share on the idea of usually accepted accounting rules (GAAP) on income of $635.9 million within the last three months of 2020. Analysts anticipated per share earnings of 34 cents on gross sales of $632.27 million.

Administration commentary alerts that though visitation in downtown Las Vegas — a core marketplace for Boyd — stays slack, there’s power within the Las Vegas locals (LVL) segment by way of buyer spend and time of visits. That could possibly be an indication issues are going nicely for the operator to start out the present quarter.

One other day, one other regional gaming operator placing up a really robust quarter. It’s getting boring proper? No method,” mentioned Stifel analyst Steven Wieczynski in a notice to purchasers at this time. “Whereas some traders would argue that many of the optimistic momentum round core working traits and sports activities betting has already been embedded in BYD’s share worth, we’d argue there may be extra to return.”

The analyst charges Boyd a “purchase” with a $60 worth goal, implying upside of virtually 10 p.c from the place the inventory closed on Feb. 16.

Boyd Vibrant Lengthy-Time period Outlook

Over the near-term, margins might have to hold the day for Boyd, as of us within the 65 and up age demographic keep away from gaming venues until COVID-19 vaccines are extra readily accessible.

Many on line casino operators, significantly these with deep regional portfolios, similar to Boyd, are in the identical boat. However the Aliante operator is realizing important value enhancements, lots of which will probably be everlasting when the pandemic is a factor of the previous. These efficiencies are bolstering margins, with some market observers noting Boyd’s earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA) surged within the second half of 2020 regardless of momentary shutdowns. Some traders say Boyd’s 2022 EBITDA could be 20 percent higher in 2022 than it was in 2019.

“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 permit for higher movement by,” mentioned Wieczynski. “As soon as virus circumstances plateau and the nation will get extra vaccinated, we imagine there will probably be important pent-up demand for shoppers to return to casinos in full pressure.”

Different Favorable Catalysts

On the finish of final yr, Boyd had $519.2 million in money readily available towards debt of $3.95 billion. Ought to it want capital, the corporate has levers to tug, together with possession of its actual property and a five percent stake in sports activities betting large FanDuel.

“Trying longer-term, we establish a number of worth creation drivers, together with strategic optionality across the firm’s predominantly wholly-owned actual property portfolio, deleveraging alternatives, and low-risk sports activities betting technique, that really feel underappreciated within the context of the present share worth/valuation,” provides Wieczynski.

The operator is focusing on an April launch for its Stardust On line casino iGaming platform in Pennsylania, which ought to velocity alongside the operator’s publicity to the fast-growing web on line casino section.

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