Churchill Downs Inventory Nonetheless Beloved On Wall Road

Posted on: February 22, 2024, 06:11h. 

Final up to date on: February 22, 2024, 06:11h.

Shares of Churchill Downs (NASDAQ: CHDN) closed barely increased at present after the gaming firm reported stable fourth-quarter outcomes late Wednesday, however with these numbers previously, analysts are turning to the operator’s new venues and potential impression these properties may have on the inventory worth.

Churchill Downs Ellis Park historical horse racing HHR
Racehorses cross the end line at Ellis Park. An analyst stays bullish on Churchill Downs inventory. (Picture: Ellis Park)

Such venues embody The Rose Gaming Resort in Dumfries, Va., for which the operator not too long ago approval to proceed with part one of many mission. Churchill Downs can also be slates to open Owensboro Racing & Gaming in Owensboro, Ky. in early 2025. That venue will function an annex of Ellis Park Racing and Gaming and serve to fund purses for horse races on the monitor.

Though issues concerning the state of the home horseracing enterprise linger, dwell and historic racing (L&H) stays a supply of energy for Churchill Downs.

Administration cited broad-based energy throughout L&H, with practically all property revenues beating our mannequin,” wrote Stifel analyst Jeffrey Stantial in a notice to purchasers. “Primarily based on our anecdotal checks, we sense this partly displays mis-modeled simple climate comps in December, in addition to extra impactfully tailwinds from skill-based video games being shut down in mid-November & continued ramp at key Kentucky properties.”

He charges Churchill Downs inventory a “purchase” with a $150 worth goal.

Churchill Downs Inventory Nonetheless a Wall Road Favourite

Analysts are bullish on Churchill Downs and that bullishness is abound although the operator has no Las Vegas publicity neither is it a serious participant within the realm of on-line sports activities betting.

Catalysts embody an intensive pipeline of excessive return on funding tasks, advantages from the Exacta and P2E acquisitions, and the rising development story tied to historic horse racing (HHR) machines. Eight of the ten analysts protecting the inventory fee it a “sturdy purchase” or “purchase” and the consensus worth goal of $143 implies 19.31% upside from at present’s shut.

Development within the operator’s TwinSpires unit and sensible acquisitions are among the many the explanation why Churchill Downs is amongst Wall Road’s favourite gaming names.

“The TwinSpires section additionally beat properly with adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) of $34.9M coming in +13%/+12% to our mannequin/Consensus. Revenues had been +2% to our mannequin, and inline with Consensus. Adj. EBITDA margins of 33.5% had been nicely forward of our/Road’s 30.2%/30.1%, seemingly reflecting mis-modeled combine impression from Exacta,” added Stantial.

Different Potential Sparks for Churchill Downs Inventory

Whereas the primary quarter isn’t but over, Churchill Downs’ second-quarter earnings could possibly be a spark for the shares as a result of the Kentucky Derby is slated for Might and the lodge on the operator’s Terre Haute On line casino Resort in Indiana is anticipated to open later that month.

Whereas the Derby is constantly seen as a marquee occasion for Churchill Downs, this 12 months would be the first version of the Triple Crown race that checks new facilities on the operator’s eponymous monitor, together with extra seating, a contemporary paddock and choices for VIPs.’

“For CHDN’s KY properties, This autumn outcomes seem pretty inline with our mannequin normalized for mis-modeled simple climate comps. Turfway, Newport, Ellis, & Derby Metropolis Gaming proceed to ramp properly post-opening/acquisition/development capex, whereas the not too long ago opened Derby Metropolis Downtown ought to see step perform development in Q2 as summer season tourism in Louisville begins whereas the Derby additionally drives excessive visitation,” concluded Stantial.

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