Casinos are lucrative businesses, and they are usually considered as an excellent investment. However, during the recent lockdowns, casinos had to suspend operating for a few months. As a result, lots of stocks in that sector ended in the red, suffering severe losses. However, the majority of the countries have already reopened businesses and lifted some restrictions. Casinos could recover losses pretty fast as people rush the gaming tables.
Meanwhile, now is an excellent time to buy casino stocks, as they are trading cheaply. Boyd Gaming is one of the companies that analysts recommend. It collapsed along with other casino stocks. Boyd’s operating performance declined considerably in the second quarter. The company operates 29 gaming properties. But all of them closed for most of the quarter due to the pandemic restrictions.
The Q2 2020 results were much better than expected – stated Joseph Greff, J.P. Morgan’s analyst. After businesses reopened in June, the stock generated levels of strong EBITDAR. Furthermore, low operating expenses allowed Boyd to generate impressive year-over-year margin gains.
How much did the stock lose during the pandemic?
Boyd Gaming’s revenue plummeted down by 75.2% to $209.9 million. Meanwhile, adjusted earnings tumbled down by 147% to a net loss of $110.5 million. Still, the company surpassed the consensus estimates for revenue and earnings by 25.7% and 47%, respectively.
Due to the recent losses, the stock is lower by 16% year-to-date. But Mr. Greff thinks that it will rebound quickly. Boyd Gaming has an advantage over other gaming companies as it is less dependent on the tourism and travel industry. And it also has a 5% stake in FanDuel.
Mr. Greff analyzed all benefits and gave Boyd a strong-buy rating. He set his price target at $30, with a 21% upside potential. Other Wall Street analysts agree that this stock has great potential. Boyd Gaming’s average price target is $27.50 per share, with a 10.5% upside potential.
- Trading Instrument