Analyst Hints at Potential Golden Entertainment Casino Sale-Leaseback

On Wednesday, the American gaming company that operates gaming properties, slot routes and taverns, Golden Entertainment, confirmed that its third quarter 2024 financial results are going to be released after market close on November 7, 2024. Ahead of the release of the financial figures, analysts shared their forecast, discussed potential challenges and opportunities the company may face.

Deutsche Bank Maintains Buy Rating, $36 Price Target

Carlo Santarelli, an expert analyst at Deutsche Bank, who was recently quoted by CDC Gaming, confirmed that the price target for Golden Entertainment remains at $36, marking a premium considering the company’s shares on Thursday closed at $31.24. Over the past six months, Golden’s shares marked a 6.55% decrease, while year-to-date, they have stumbled by 22.09% or $8.86. Still, Deutsche Bank retained its Buy rating for the company, highlighting the potential probability for the operator to consider selling one of its properties to gain an advantage of leaseback.

While Deutsche Bank retained the price target for the company, the analysts lowered their forecast. The reduced projection comes amid gaming revenue-related challenges Golden Entertainment is experiencing in Las Vegas, as well as the unusually hot summer, higher union contracts and margin and revenue issues related to its tavern division.

A Sale-Leaseback Can Have an Impact on Golden’s Shares

Focusing on the potential leaseback opportunity, the analyst did not reveal which casino resort real estate Golden Entertainment may consider selling. Santarelli and Deutsche Bank explored how a sale-leaseback transaction may impact the company’s shares. The experts explained that if Golden Entertainment considers selling one casino resort property, it will benefit from $87 million in rent from the $174 million in 2025 property-level EBITDAR projected by Deutsche Bank.

“We assume Golden on a 2025 year-end basis would have $130 million of net cash, including the proceeds and capitalizing the $87 million of assumed rent,“

wrote Carlo Santarelli, expert analyst at Deutsche Bank

Santarelli revealed that recent developments with Golden involved downward estimate revisions, which is why the analyst considered the speculation about a potential strategic move such as a sale-leaseback.

With that in mind, the company is yet to officially confirm or reject such a course. In the event of Golden Entertainment engaging in such an endeavor, it would likely require approval from shareholders, its Board of Directors and relevant regulatory bodies.