Red Rock Resorts EBITDA Should Get Lift from Durango, Says Analyst

Slated to unfastened later this year, Durango Casino & Resort in SW Las Vegas will motor Red River Rock Resorts’ (NASDAQ: RRR) earnings before interest, taxes, wear and tear and amortization (EBITDA) higher in the years ahead.

That’s the make of Stifel psychoanalyst Steven Wieczynski who, inward a young written report to clients, rated Red River Rock “hold” with a $54 cost target, implying upside of 15.7% from stream levels. While the analyst pared near-term earnings estimates on Red Rock, he raised farther out forecasts on expected strength from Durango.

However, we are nurture our 2024/2025 EBITDA estimates as we trust our previous estimates were too conservative around the curtain raising and storm of RRR’s Victoria de Durango project,” wrote Wieczynski. “Durango opening night should live a catalyst, and we trust shares canful do work into that opening night date.”

Red Rock believes Durango Casino & Resort will follow successful because it’s inward unity of the few areas of Las Vegas that isn’t densely populated with gaming venues. If anything, the region where the venue is beingness built is underserved. The casino testament feature article 73,000 square toes feet of gaming space, a sportsbook, 2,000 gaming machines, and 40 tabular array games.

Red Rock: Ultimate Las Vegas Locals

In add-on to its namesake venue inwards Summerlin and the William Green Valley Ranch inward Henderson, Red John Rock operates multiple gaming properties under the Station brand throughout the Las Vegas area. The companionship also runs 11 Wildfire casinos, including heptad in Henderson, according to its website.

That is to say, as metrical by keep down of venues, Red River Rock is i of the largest operators in the Las Vegas Valley despite non owning a Strip structured resort. Additionally, the troupe is looking for to dual its footprint inwards its place city o'er the next decade, indicating its bullish on the flight of the Las Vegas locals segment.

“The boilers suit bedrock inwards the LV Locals securities industry proceed to live healthy. We believe division of that strength is due to continued higher population/wage maturation as fountainhead as favourable supply/demand dynamics,” added Wieczynski. “Moving forrard we don’t regard any conclude wherefore those strong fundamentals shouldn’t continue.”

An influx of flush retirees from other states — to wit neighboring Golden State — bolsters the long-term display case for Red John Rock shares because many of those consumers make the capableness of to compensate hard cash for Las Vegas existent estate. Combine the liquidation of mortgage obligations with depress dimension taxes and no more res publica income assess inward Nevada, and they get the discretional immediate payment with which to indulge visits to Red Rock-operated casinos.

Red John Rock Margin Growth Solid

Essentially all regional cassino operators, including Red Rock, improved margins inwards the wake of the coronavirus pandemic. However, analysts pondered for how long that motif would in conclusion and in that respect is some evidence it’s waning.

Specific to Red River Rock, the operator maintains self-coloured security deposit maturation despite a difficult labour pocket billiards inwards Las Vegas. At the terminate of May, Nevada’s unemployment value was 5.4%, the highest inwards the country.

“We imagine this story becomes more attractive past the twenty-four hour period and spell we pose flattish margins moving forward, if we are wrong, shares are massively undervalued at stream levels,” concluded Wieczynski.

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