Caesars Entertainment Under Analyst Scrutiny as Ratings Diverge

Caesars Entertainment has become a focal point for stock analysts as differing opinions on the company’s future trajectory emerge. 

JMP Securities Bullish on Caesars with a $65.00 Price Target

JMP Securities initiated coverage on January 9, offering an “outperform” rating and setting a $65.00 price target on the stock, reported financial news media outlet Marketbeat. This upbeat assessment suggests a potential upside of 40.54% from the current price. In contrast, JPMorgan Chase & Co. lowered their price target to $54.00, implying a more conservative 19.87% upside.

Analysts closely watched the company’s quarterly earnings data released on October 31, 2023, where Caesars beat consensus estimates with $0.34 earnings per share, higher than the expected $0.27. The company reported revenue of $2.99 billion, exceeding analysts’ expectations of $2.94 billion.

Noteworthy insider activity has occurred, with Director Michael E. Pegram purchasing 15,000 shares at an average price of $41.90, totalling $628,500. This move reflects confidence in the company, as Pegram now holds 136,697 shares valued at approximately $5,727,604.30.

Large institutional investors have also made adjustments to their positions in Caesars. Soros Capital Management increased its stake by 0.4%, while Czech National Bank and Creative Planning raised their positions by 0.8% and 2.6%, respectively. These moves indicate a mix of confidence and caution among institutional players.

Caesars Faces Price Target Cuts from JPMorgan and Morgan Stanley

JPMorgan Chase & Co. was not the only one to lower its price target for Caesars. Morgan Stanley also reduced it from $48 to $45, indicating a modest downside. 

Of the 16 analysts covering Caesars, 12 rated it as a “strong buy” or “buy,” while four rated it as “hold.” The consensus price target of $61.94 implied a potential upside of 36.55%, but some analysts highlighted the possibility of downward revisions. 

At the same time back in December, Barclays analyst Brandt Montour favored Penn National Gaming (PENN) and Caesars Entertainment as top gaming picks for 2024, citing Penn’s success with ESPN Bet and Caesars’ underappreciated deleveraging and robust free cash flow. 

However, analysts have also made other projections. According to analyst Shaun Kelley from Bank of America, Caesars Entertainment may divest two of its Indiana properties, Horseshoe Indianapolis and Harrah’s Hoosier Park, to reduce financial liabilities. The potential sale, estimated to raise nearly $2 billion in net proceeds, could involve VICI Properties as the buyer, with the analyst suggesting this move would align with Caesars’ focus on reducing leverage and achieving targeted financial ratios.