Bank of America Breaks Down Q1 Gaming Sector Results

Recently, major gaming and entertainment companies across the United States released their financial results. In light of the latest figures, revealing details regarding the businesses’ performance in Q1 this year, Bank of America (BofA) confirmed the release of its first quarter earnings scorecard, as announced by CDC Gaming.

The latest report compared estimates with report results, highlighting that six companies were able to surpass the initial expectations. While six gaming businesses were able to beat BofA’s expectations, one matched the prediction, while four operators missed the initially set targets for the first half of 2024. Notably, after releasing the scorecard with highlights, BofA announced a number of actions and updates in light of the recently released financial results of gaming companies.

Changes to Gaming Companies’ Ratings

Per the latest scorecard, BofA maintained the outlook for Wynn Resorts with a price target of $115, a figure that represents approximately 10x its 2024 EBITDAR estimate. Recently, the company released details regarding its Q1 revenue and EBITDA which hit $1.86 billion and $647 million respectively. The results were largely in line with expectations, albeit the prediction for EBITDA was $622 million.

Shaun Kelley, an expert analyst with the Bank of America, commented on the topic explaining: “We estimated the share was 14% and in line with our expectations.” He added: “In Las Vegas, EBITDA was $246 million and in line with our above-consensus $247 million. Non-gaming spend came in ahead of our expectations, while gaming spend was slightly lighter, driven by year-over-year declines in slot volumes. Overall, our forward estimates move slightly lower, with higher Macau estimates offset by lower Las Vegas estimates.”

PENN Entertainment’s Q1 revenue was $1.61 billion. The company also reported $256 million in EBITDA for the first quarter this year. Those results were also in line with BofA’s estimate of $1.59 billion in revenue and $260 million in EBITDA for the period. “Penn reduced digital revenue and EBITDA expectations materially and lowered core property EBITDA guidance, driving the sell-off in shares,” wrote Kelley. Still, BofA confirmed a downgrade for PENN’s rating to neutral.

In contrast, Red Rock Resorts’ Q1 revenue hit $490 million, while EBITDA for the latest trading period reached $210 million. Those results were in line with BofA’s expectations of $510 million in revenue and $210 million in EBITDA. As a result, the rating for the company was upgraded to neutral.