Like its gaming peers, Boyd Gaming (NYSE:BYD) stock is slumping. But some analysts see opportunity in shares of the Aliante operator.
Boyd Gaming’s Orleans casino-hotel in Las Vegas. An analyst is constructive on the stock. (Image: Vegas Means Business)
In a note to clients today, JMP Securities analyst Jordan Bender initiated coverage of Boyd stock with an “outperform” rating and a $65 price target. That implies upside of 34.2% from the Sept. 22 close. Nevada — Boyd’s home and largest market — is one of the reasons the analyst is bullish on the shares.
Macro factors in Nevada, such as home prices and taxable sales, remain healthy, supporting a strong spend per head in the locals/downtown market where the company generates ~39% of its earnings,” Bender wrote. “As a result, NV has proven to be one of the healthiest gaming markets, outpacing U.S. regional gaming in nearly every month since the onset of the pandemic.”
Boyd runs 28 gaming venues across 10 states, including 11 in its home city, and it’s the dominant operator in downtown Las Vegas.
Boyd Stock Under Pressure
Bender’s new coverage of Boyd stock arrives with the stock under pressures, as is the case with many of its rivals across the casino equity complex.
The stock is down a 9.91% over the past week — a period that included Wednesday’s 75 basis-point interest rate increase by the Federal Reserve. Over the past month, shares of the Orleans operator are lower by almost 13%. That time frame included the worse-than-expected August reading of the Consumer Price Index (CPI).
Those are signs macroeconomic factors are pinching casino stocks of all varieties. For Boyd, however, its substantial Nevada footprint is potentially more attractive in times like these. That’s because the bulk of its venues in the Las Vegas area aren’t heavily dependent on tourists, but rather locals that aren’t worried about high airfare and gas prices.
Bender notes that Nevada’s favorable demographics and growing population can provide long-term tailwinds to Boyd stock. He also applauded the company’s strong balance sheet and nascent but growing iGaming exposure.
Bullish on Gaming and Leisure Properties, Too
Casino real estate investment trust Gaming and Leisure Properties (NASDAQ:GLIP) also earned a bull call from Bender.
The analyst started coverage of that stock with an “outperform” and a $53 price target. That implies upside of 13.8% from the Sept. 22 close.
“Our positive opinion is based on several factors, including durable earnings backed by long-term leases with publicly traded casino operators, its ability to demonstrate off-market transactions leveraging its client relationships and reputation from management, strong capital position with low leverage and ample liquidity, and compelling absolute and relative valuation,” wrote the analyst.
Gaming and Leisure, which owns the real estate of the Tropicana on the Strip, has a “stellar track record for value creation,” added Bender.