Casino stocks suffered severe losses during the coronavirus pandemic lockdowns. Most of them fell drastically, selling for a steal. However, experts think that the companies will rebound very quickly in the coming months. They expect people to crowd casinos after so much time of forced abstinence.
Therefore, casino shares are an excellent investment right now. They are cheap but have great potential. Analysts recommend several futures as a strong-buy, Boyd Gaming being among them.
Boyd Gaming operates 29 gaming properties, and it is divided into three segments: Downtown Las Vegas, Las Vegas Locals, and Midwest and South. All 29 of Boyd’s properties closed for most of the quarter due to the pandemic. As a result, operating performance declined considerably in the second quarter.
Stock’s revenue plunged by 75.2% to $209.9 million. Adjusted earnings also collapsed by 147% to a net loss of $110.5 million, versus the second quarter of 2019. But despite that, the company still managed to beat the consensus estimates for revenue and earnings by 25.7% and 47%, respectively.
What do analysts think?
Joseph Greff, J.P. Morgan’s analyst, stated that the Q2 2020 results were much better than expected. The stock generated levels of strong EBITDAR in June after businesses reopened. Boyd Gaming reported significantly lower operating expenses, which allowed it to generate impressive year-over-year margin gains.
Despite that, the stock is lower by 16% year-to-date. But Mr. Greff thinks that it will recover quickly. The firm has an advantage over other gaming companies as it is less dependent on the tourism and travel industry.
Furthermore, analysts see Boyd as a non-conventional way to drive growth in U.S. sports betting. Investors largely overlook its 5% stake in FanDuel.
Considering all the benefits, Joseph Greff gave Boyd a strong-buy rating. He set his price target at $30, which has a 21% upside potential. Other Wall Street analysts agree with Mr. Greff. The stock has got an 8 Buy rating thus far. The $27.50 average price target has 10.5% upside potential though.