Caesars Entertainment’s (NASDAQ:CZR) debt burden stood at $13.5 billion at the terminal of March — among the highest inwards the gaming industry — but 1 psychoanalyst sees the company’s debt-reduction efforts potency accelerating o'er the near-term.
In a recent billet to clients, Stifel psychoanalyst Steven Wieczynski says “the potency expected sale of a Las Vegas Strip plus should dramatically speed up an already considerable organic fertiliser deleveraging story.”
Dating plump for to cobbler's last year, Caesars direction said it expected to unveil the sales agreement of one of its Strip venues early inward 2022. Since then, the only debates centered around when the manipulator would officially announce an asset sale and which Las Vegas locus it would be.
Nearly halfway through and through the year, that promulgation hasn’t arrived. Last month, reports surfaced the manipulator is shopping the Flamingo at a toll ticket of rough $1 billion. There’s venture that Caesars may experience difficultness unloading that holding because it needs enhancements and business concern there power declination if it’s no more thirster part of the Caesars Rewards program.
Conversely, owing to comparisons on other recent Strip property sales, it’s possible Caesars could mastery high teens multiple when it decides to portion shipway with unity of its Sin City venues.
Caesars Management Sounds Optimistic Tone
Wieczynski of late met with Caesars CEO Tom Reeg and other high-ranking executives, noting they’re bullish on both Strip and regional casinos and that investors may live overlooking the company’s free immediate payment stream (FCF)-generating potential.
We trust the market continues to price reduction the ‘post-COVID’ FCF potential of CZR’s brick & howitzer business, management’s iGaming/OSB opportunity (not even out priced into shares anymore), the Omni-channel marketing potency embedded inwards Total Rewards, and potentiality for asset sales,” says the analyst.
Still, as is the showcase with other gaming equities, Caesars is slumping this year. The shares are cancelled 51.35% year-to-date due to culprits such as rising prices and border concerns. On the shiny side, it’s possible that security deposit concerns are overdone and Caesars may make some impulse on that front.
“Management firmly sees these concerns as overblown, highlighting that (1) the electric current trend inward the nest egg order could connote tailwinds to the consumer through 2023 and (2) their boilers suit be structure is predominately ‘right-sized’ by this repoint with any modest pockets of be inflation potential offset printing past the take of the high up security deposit mathematical group customer,” adds Wieczynski.
Caesars Risk/Reward too Attractive to Ignore
With Caesars buy in turned 62% from its 52-week heights and issues such as inflation, soaring gaseous state prices and rising involvement rates factored into the portion price, risk/reward may live skewing more towards “reward.”
“We believe shares hold corrected to the power point where investors want to revisit this story. Vegas and Regional trends go on to outpace expectations, and it seems the like trends feature only if gotten ameliorate through May,” concludes Wieczynski.
He rates Caesars a “buy” with a $113 toll target, implying it can buoy more than stunt woman from the June 10 tightlipped of $45.50.
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