Even the illusion of a rising tide lifts all boats, it would appear. Yesterday’s big stock-pump by Caesars 
Entertainment carried Boyd Gaming up with it, as did much-better-than-expected first-quarter numbers from Boyd. Shares that closed Tuesday at $8.94 were riding as high a $11.70 today. As one Wall Street newsletter put it “What to do 23% later”? Set a higher price target, for one thing. Boyd executives have long held that the stock is undervalued, largely due to Boyd’s vulnerability in the urban and suburban Las Vegas markets, with the former showing some worrisome slippage.
As Motley Fool pointed out, Peninsula Gaming acquisitions are driving all of the 1Q13 growth. Still, J.P. Morgan analysts assigned 25% of their new, higher stock valuation to Borgata alone — and its ability to penetrate New Jersey‘s intrastate Internet-gambling market. “Organic revenue growth is negative and the company still isn’t making a significant profit. I’d sell on the bump and move on to higher quality gaming companies,” wrote Fool analyst Travis Hoium. Boyd CEO Keith Smith pounded the theme of greatly improved cash flow in the Vegas market, even if not all were persuaded. Carlo Santarelli predicted near-term cashing out by shareholders and argued, in essence, that Wall Street was “yearning for a locals inflection with legs” and other indications of recovery — and was therefore willing to overlook the difficulty (in his view) of sustaining this momentum. Even so, Santarelli likes BYD better than does his Morgan opposite number, Joseph Greff, who will only raise his price target to $8, compared to Santarelli’s $10. If you invest in Boyd, you ship will eventually come in, but today’s rally demonstrates how long the wait can be.
I have always been a BIG believer in BYD. I do not believe that there is another company in the industry that is operated like it left (largely a family enterprise). They have gaming in their blood, are good to their employees and the communities that they operate in. Their executive team is made up of genuinely good people and Wall Street has been short-selling them (literally and figuratively) for years. They have made a few missteps over the past few years, but who else hasn’t? What it boils down to is that this organization has good long-term fundamentals; as it always has.
Guru, Amen to that! Boyd is a gaming company, most are just run by banks and investment companies.
I listened to their latest conference call and it seemed that Boyd management seems to understand that the future of gambling (… er … excuse me, I mean gaming 🙂 is over the Internet and not building billion-dollar monstrosities that take years to pay off and cost hundreds of millions annually in upkeep. Pay a few programmers to put up a website where gamblers can gamble away 24/7 while the house takes a small % of every bet. It’s the Amazon model vs. the Best Buy model. The Internet model is so much more profitable!