J.P. Morgan analyst Joesph Greff has lowered his fourth-quarter Las Vegas Strip cash-flow projections for Caesars Entertainment. The revision stems from a disappointing Las Vegas Grand Prix in 2024 compared to November 2023’s inaugural run.
Greff lowered his price target on CZR shares from $58 to $57 in an investor note on January 2. He also reduced his forecast from $499 million to $485 million, which would be almost flat with the $489 million recorded in Q4 of 2023, reports CDC Gaming.
The analyst based his forecast on modest declines in gambling volume, a “relatively normal” table game hold of 22%, and lower margins. These factors, in turn, were partly attributed to a disappointing F1 Grand Prix in 2024, which didn’t manage to live up to the excitement generated by 2023’s debut run.
Caesars Digital also received a lower return on investment from online sports betting (OSB), revised to $26 million from a previous $51 million, on the back of customer-friendly results in December. The analyst believes that this phenomenon was widespread in the betting industry and will also show up in earnings calls from other OSB operators.
In contrast to the F1 and sports betting disappointments, the opening of Caesars’ new casino in Danville, Virginia, provided a bright spot for the operator during the quarter, along with the completion of a rebrand at Caesars News Orleans. These two major developments provided a needed boost to Caesars’ regional segment performance.
Greff stood by a prediction of over $1.86 billion in Strip-derived cash flow for Caesars, although he shaved $10 million off a $1.82 billion forecast for the regional casinos. His prediction of a $354 million digital return on investment also remained the same.
Meanwhile, corporate expenses were winched up $20 million to $190 million for the upcoming year, while interest expense was anticipated to be lower, $756 million instead of a previously thought $800 million.
Describing Caesars’s shares as “solid medium-term risk/reward,” Greff concluded by asserting that their value overrode a lack of near-future catalysts in Las Vegas for casino operators in general. “We don’t see a great dynamic to be massively negative for any period of time either,” he added, as per the CDC Gaming report.
Caesars is set to report its fourth quarter and full year 2024 results on February 25.
Original article: https://www.yogonet.com/international/news/2025/01/03/90602-jp-morgan-analyst-downgrades-caesars-q4-projection-after-disappointing-f1-las-vegas-race
