JP Morgan Updates Price Target for Red Rock Ahead of Q1 Results

Earlier this month, the gaming and hospitality operator, Boyd Gaming, released its first quarter results, highlighting an increase in online revenue despite a dip in its overall revenue. In total, the company reported $960.5 million in revenue, a figure that was slightly lower year-over-year when compared to the Q1 2023 result of $964.0 million. Upon announcing its first quarter results, Boyd Gaming’s CEO and president, Keith Smith, acknowledged some challenges related to “increased competitive pressures in the Las Vegas Locals market.”

Now, an expert analyst with J.P. Morgan, updated the stock price target for Red Rock Resorts, a holding company that is owned and operated by another Las Vegas giant, Station Casinos. Joseph Greff, an analyst with the leading financial services firm, who was recently quoted by CDC Gaming Reports, released a note to investors, updating the price target and EBITDA estimate for Red Rock Resorts.

Earlier this month, J.P. Morgan increased its estimated price target for Red Rock. The price target jumped from $63 to $69 in light of stronger-than-expected results for the company’s Durango Casino and Resort located in Las Vegas Valley. However, on Monday, Greff confirmed that J.P. Morgan lowered its year-end 2024 price target from $69 to $63. Still, he confirmed that Red Rock will retain its overweight rating, adding that the price target offers an 18% increase on the current levels.

The expert analyst explained: “While we don’t think our embedded Durango EBITDA contribution has risk, nor do we see Red Rock property cannibalization differently than before, we do think it is safe to assume Red Rock’s non-higher-end properties (a much lower percent of total than Boyd’s) have risk on a locals consumer slow-down and want to take the risk out of our forecast.”

The Leading Financial Firm Updates EBITDA Estimates

Earlier this month, Red Rock confirmed its plans to release its first quarter of 2024 results on Tuesday, May 7. The company added that it will hold a conference call on the same day and answer questions. On that point, Greff said: “Red Rock Resorts reports on May 7. We expect to hear very positive things about Durango, though we do note that the quarter ended on a softer market-wide performance.”

The expert analyst also updated the company’s 2024/2025 EBITDA estimates. Greff said that J.P. Morgan projected full-year-2024 property-level EBITDA for Red Rock of $896 million. This estimate was down by 3% on the previous prediction. Similarly, the estimate for 2025 decreased by 2% to $841 million. Initially, the company projected $860 million for Red Rock in 2025.