Bank of America Likes Boyd, Churchill Downs, Sours on Red Rock, Sands

In a wholesale commentary on cassino stocks today, Bank of America psychoanalyst Bank of America psychoanalyst Shaun Kelley recommends focusing on character and value opportunities inwards the space.

In a tone to clients, Kelley highlights at least vii gaming names, speech production bullishly on a quadruplet patch downgrading a trio. Among the names the analysts same as quality and note value plays are Boyd Gaming (NYSE:BYD) and Winston S. Churchill Downs (NASDAQ:CHDN). The duo is turned an mediocre of 3.5 percent to starting 2022. But that’s significantly to a lesser extent forged than the protrude to the yr for a slew of casino stocks.

Las Vegas-based Boyd runs 28 gaming venues crossways 10 states, including 11 inward its place city, and it’s that exposure to the local securities industry that makes the troupe i of Wall Street’s preferred gaming ideas for 2022.

Both Boyd and Winston S. Churchill are forecast to bring forth telling liberal immediate payment flow this year – a calibre trait – and each is purchasing indorse their have shares, signaling direction teams see value inwards those stocks. Speaking of value, the Bluegrass State Derby operator may live offering that, trading around $223, with a consensus toll aim of almost $280.

Challenges for Las Vegas Sands, Others

While Kelley sees a lot to like with Boyd and Churchill Downs, he’s less enthusiastic well-nigh Gaming and Leisure Properties (NASDAQ:GLPI), Las Vegas Sands (NYSE:LVS), and Red John Rock Resorts (NASDAQ:RRR).

He downgrades all trinity names to “underperform,” and in the grammatical case of GLPI, it’s a duple downgrade, because the gunstock goes from “buy” to “underperform,” piece the other 2 were antecedently rated “neutral.” In the grammatical case of LVS, it’s the same older song: Macau. Ongoing lethargy inward the world’s largest casino hub explains why so few on Wall Street are bullish on Sands today.

We ensure continued risk from COVID-related perturbation and perform non see a unsubdivided or soft leave from the implications for Macau of China’s cypher tolerance COVID policy,” said Kelley. “In addition, we reckon tonality source markets around southeastern United States Asia could weigh on the rate of recovery inwards Singapore.”

The psychoanalyst adds concessionaires could make up to a greater extent for Macau licenses when those permits are renewed, resulting in a depress take back on invested capital, piece perhaps hindering shareholder reward plans.

Regarding the downgrade of Red Rock, Kelleys says the operator could be vulnerable to toughened comparisons followers a warm 2021, and rising costs inwards a tight Las Vegas labour market. When it comes to GLPI, he says that gaming existent land fast(a) has to a greater extent rising prices tribute than competition VICI Properties (NYSE:VICI).

High genus Beta Ideas

Kelley believes higher beta gambling casino stocks could bounce backward inward the endorse half of 2022, as estimates and margins check reduced volatility. He likes Caesars Entertainment (NASDAQ:CZR) and William Penn National Gaming (NASDAQ:PENN) in that group.

Currently, there’s no more shortage of support for Caesars, owing to what analysts eyeshot as its favorable commixture of Las Vegas and regional exposure, coupled with a growing iGaming and sports wagering footprint.

With Penn, sentiment seems to follow shifting to acknowledgement that the gunstock was beaten-up too often shoemaker's last twelvemonth and that investors may have lost ken of what’s a warm portfolio of land-based gaming assets.