B. Riley Lowers Golden Entertainment Expectations, Maintains Buy Rating

B. Riley has lowered its score for Golden Entertainment slightly while still maintaining a “buy” rating. The new outlook led to an immediate slump in the gambling company’s share price.

The Operator’s Business Suffered Because of the Hot Summer

As mentioned, B. Riley reduced its estimates on the company, lowering CY24E EBITDA by 4% and CY25E EBITDA by 5%. Analyst David Bain maintained a buy rating for Golden Entertainment with a new price target of $40 (previously $44).

The B. Riley analyst justified its new score with the record-breaking summer in Las Vegas. The intense heat, for context, affected Golden Entertainment’s business, causing its stock to decrease by approximately 3.2% over the past three months. The company has so far reported a year-to-date loss of almost 25.5%

The changes to B. Riley’s expectations caused a slump in Golden Entertainment’s share price, which is standing at $30.47 per share as of the time of this writing. This figure had decreased further earlier in the day but has since experienced a slight recovery.

B. Riley: Golden Entertainment to Continue Its Share Buyback Strategy

Bain explained that his firm’s new score reflects the low convention attendance Las Vegas experienced in July, as well as the slowdown in Laughlin traffic in the third quarter of the year. For context, the company operates the Aquarius and Edgewater properties in Laughlin.

In the meantime, Golden Entertainment operates the Strat, an iconic property near the Las Vegas Strip. While the Strat has been struggling to catch up to its pre-pandemic occupancy figures, the casino hotel has been experiencing a steady operation that could underpin Golden Entertainment’s overall business.

The demolition of the Tropicana and the temporary shutdown of the Mirage are expected to further contribute to the Strat’s business.

In the meantime, Bain suggested that Golden Entertainment will most likely look into share buyback opportunities. The expert said that B. Riley specialists are convinced that the company will be able to acquire $61 million in its own shares by the end of the year, which is in line with its buyback program.  

In addition, the analyst proposed that Golden Entertainment would use additional cash and some of its undrawn revolver to continue repurchasing shares. Finally, Bain said that another thing Golden Entertainment might try is to sell the real estate on which its casino properties are based. As of the time of this writing, the operator has not confirmed any such moves.