Today, something non-controversial AND quantifiable. Boyd Gaming was the first major casino company to report 4Q24 earnings and no wonder why: The numbers impressed Wall Street. Even before the earnings call, Jefferies Equity Research analyst David Katz opined that “the breadth of development projects in its pipeline, which we anticipate will generate growth over time, and focus on capital returns should provide a catalyst for shares.” As the value of Boyd’s 5% stake in FanDuel continues to accrue, he wrote, and year/year comparisons in Las Vegas ease, Boyd will continue to outperform its rivals, especially with its project pipeline in Virginia and Sin City.
Once the Boyd results were officially announced, Katz hiked his price target a buck to $93/share and kept a “Buy” rating on BYD. Although The Orleans and other Vegas-locals properties continued to be hampered by promotional wars, Katz reported that this was more than offset by strength in Boyd’s other markets. Its revenues were $40 million ahead of where analysts thought they’d be and cash flow ($379 million) also handsomely beat expectations. While the firms’s Midwest/South division provided most of the lift, even Las Vegas exceeded projections. (Strong tourism from Hawaii didn’t hurt.) “Other” (read: Sky River Casino in California) provided an extra $5 million that Wall Street didn’t foresee.
Boyd will be busy bees for the next two years, as it expects an early-to-spring start on a new Par-A-Dice, pending approval from the Illinois Lege. Even sooner will come the start of work in Norfolk, with the goal of having a temporary casino open by November. Boyd will spend $100 million in Peoria and, initially, double that in Norfolk, pictured. The capex budget for next year is pegged at $650 million, tops. In addition to those projects, Cadence Crossing (RIP, Joker’s Wild) will see an expanded casino floor and a hotel in Henderson. Execs tempered expectations with the caveats that the Las Vegas market wouldn’t stabilize for another six months and bad weather was dampening 1Q25. Even so, the outlook was bright.
“Investors were largely anticipating a beat, though the source of the beat was broadly expected to come from the MW&S segment, which delivered upside to revenue estimates,” yawned Deutsche Bank‘s Carlo Santarelli, who dismissed the quarter as “solid.” He thought the themes familiar: stable business, moderate cost expansion and a “relatively flat” year ahead. Boyd continues to beaver away at stock buybacks, he noted, with $200 million repurchased lately and another $700 million to come in the foreseeable future. Despite a “Hold” rating, Santarelli boosted his target price from $79/share to $84.
By contrast, Truist Securities analyst Barry Jonas called the numbers “nifty … Treasure Chest outperformed and drove growth, with core strength and retail stability across Locals, Downtown and M&S.” Describing Boyd’s business strategy as “stellar” (we tend to agree), Jonas cited the company as “a core holding for gaming investors.” Sticking with a “Buy” rating, he upped his price target to $92/share from $88. He said management’s hopes for 2025 included a return to stability at Gold Coast and The Orleans, as well as in-line growth Downtown and overall outperformance in the Las Vegas Valley. A full year of star performer Treasure Chest is expected to provide an additional boost.
The company is evidently feeling its oats, to judge by the capex agenda. It includes enlargement of Ameristar St. Charles, plus renovations at Valley Forge Resort, The Orleans and IP Biloxi. Norfolk will eventually consume $750 million (1,550 slots, 50 tables, 200 hotel rooms), with the company hoping that its temporary—aka ‘slots in a box’—casino manages to break even. That’s the goal, anyway.
Unfortunately for Station Casinos, “solid” was the most any of our Wall Street Cerberus could muster to describe its 4Q24. Upcoming construction-related disruptions prompted Jonas to stay with a “Hold” rating although his price target leapt to $56/share from $49 per. Station apparently did well on the Super Bowl, but that came too late to offset a wintry $14 million hit at the sports books. Durango Resort is still doing better than even Station thought it would, with an impressive 16% ROI. Both cash flow and net revenue were marginally higher than stock analysts expected.
Still, the Vegas-centric company recorded its best fourth-quarter revenue and cash flow in Station history, “driven by strong customer engagement and higher spend per visit across the database.” Jonas pointed out that Station found locals business to be solid, contrary to Boyd’s perceived softness. F&B was flat, despite higher prices and more business, but hotel revenues hopped 8%, as did casino winnings. In fairness to F&B, 4Q23 was inflated by Covid-displaced business booked in years prior.
The high end of Station’s customer base is said to be driving firm 1Q25 custom, solid across slots and tables. One tiny canary in the coal mine is a $1 million decline in business across Super Bowl weekend (reported anecdotally to have been a bad one for Sin City). Management predicted a 6.5% cash flow increase this quarter but Jonas observed that it didn’t seem to take construction upheaval into account. Red Rock Resort is said to be on the comeback trail from Durango’s impact but it will take as much as three years to fully recover.
In other news, Station’s on-again/off-again interest in Reno is experiencing another “on” phase and mammoth (4,400 machines), $750 million North Fork, in California, is shooting for a mid-2026 opening. Both initiatives are to be encouraged, because 100% of Station’s exposure is to the Vegas market and if the latter catches an economic cold, Station will experience life-threatening pneumonia.
“Although we expect strong long-term growth, we remain measured on the name given the impact of capital projects,” penned Katz, echoing Jonas’ view. He added a dollar to his $51 price target but stayed on “Hold” for RRR stock. The Green Valley Ranch renovation, he noted, now encompassed the convention area, raising that budget from $150 million to $180 million. Work will begin in June and be done by next January. New-customer signups are still robust: 85,000 since Durango debuted. Group business is still a bit wan but Station expects that to start improving in June and on into 2026.
Although he said he was skeptical of forecasts, Santarelli was the most enthused of the three analysts, writing that Station was “healthily exceeding the bar management set back in early November … despite an incremental $6 mm of sports book hold headwinds in December.” He added that “the optimism out of the print likely relates more to the lower bar for the 4Q24 being surpassed, despite headwinds, than any true fundamental change in the LV locals market which would serve to raise expectations for 2025 considerably.” He added that Station’s true catalyst might come in the form of corporate tax cuts (like that’s not going to happen), adding that the company’s long-term-growth strategy still held allure.
Santarelli put a “Buy” on RRR, even though his price target stayed at $62/share. “At current levels, we regard the shares as relatively inexpensive, especially when looking beyond the disruptions of 2025 and out to 2026,” at which point Phase II of Durango should be complete, North Fork open and all capex disruptions elsewhere finished. The Durango upheaval is expected to redound to Red Rock Resort’s benefit, while a $22 million impact from the Sunset Station (above) and Green Valley reworking is thought to be recaptured elsewhere in the Station portfolio. Santarelli argued that it would have been a very good 4Q24 were it not for the sports betting wipeout … but if wishes were horses, no man would walk.
JOTTINGS: We’ve made fun of Fanatics CEO Michael Rubin in the past but he may get the last laugh. OK, the goal of having the #1 or #2 OSB firm in the United States seems fancifully out of reach. But a solid (if distant) third place is within his grasp. Just look at the latest numbers out of New York State, where Fanatics bested both BetMGM and Caesars Sportsbook. Using athletic gear to promote sports betting (or vice versa) seems a cockamamie business stratagem but it’s working … Monarch Casino Resorts well outperformed Wall Street‘s expectations. Even so, one analyst was kinda ‘meh,’ another one more enthused. Monarch is a good company that sticks to what it knows, even if CEO John Farahi is maddeningly media-shy … As mentioned, word on the street is that Super Bowl Weekend was El Stinko for Las Vegas. After six months of Las Vegas Strip gambling revenues heading down, down, down has price-gouging caught up with Sin City? Several experts think so … There’s no one quite so irrational at a disgruntled sports bettor, to the point where an undercurrent of racism is emerging loud and clear. There’s a lot of that going around today, sad to report.