Argus Research has upgraded Boyd Gaming Corporation (NYSE: BYD) to a "Buy" rating with a price target of $90, citing robust operational performance, strategic developments, and growth in the online gaming sector. Boyd Gaming, a mid-cap growth stock with a market capitalization exceeding $6.6 billion, has shown significant strength across its property portfolio and digital platforms, making it a compelling investment opportunity.

Boyd Gaming’s Strategic Position and Growth Trajectory
1. Strong Regional Performance Driving Revenue Growth
Boyd Gaming has experienced a notable uptick in revenue, particularly across its Downtown Las Vegas and Midwest and South properties. The company reported a 3Q24 revenue of $961 million, reflecting a year-over-year increase from $903 million. This growth has been bolstered by enhanced foot traffic and operational efficiencies at key properties like Ameristar St. Charles, Blue Chip, and Gold Coast.

2. Leadership in Online Gaming Through FanDuel Partnership
The company’s strategic alliance with FanDuel solidifies its leadership in the growing online sports betting market. The Online Gaming segment reported a revenue surge to $141 million, up from $90 million in the previous year, showcasing the potential of its digital operations.

3. Expansion and Renovation Efforts Fuel Future Growth
Boyd Gaming’s development pipeline remains robust, with a focus on hotel renovations and property upgrades. These enhancements are anticipated to improve guest experiences and operating margins, particularly at regional and Las Vegas properties.

Financial Highlights and Upgraded Earnings Projections
1. Upgraded EPS Estimates Reflect Positive Outlook
Argus Research revised Boyd Gaming’s 2024 EPS forecast to $6.40, up from $6.20, and its 2025 estimate to $6.70, citing strong operational performance and favorable market dynamics. This aligns with the company’s commitment to driving long-term growth, despite a slight reduction in its growth rate estimate to 12% from a previous 18%.

2. Record Revenue and Share Buybacks Strengthen Valuation
In 2023, Boyd Gaming achieved record revenue of $3.55 billion, complemented by a share buyback program that reduced outstanding shares to 91.9 million from 100.8 million. The company recently expanded its buyback authorization by $500 million, underscoring its commitment to enhancing shareholder value.

3. Improved Margins and Dividend Growth
The company’s operating margin stood at 22.9% in 3Q24, reflecting solid profitability. Additionally, Boyd increased its annual dividend by 6.3% to $0.68 per share, offering investors a stable income stream.

Recent Developments: Surging Stock Performance
Boyd Gaming shares have outperformed the broader market, rising 38% over the past six months, compared to the S&P 500’s 12% gain. This momentum underscores investor confidence in the company’s growth strategy and operational resilience.

Key Technical Levels for Boyd Gaming
1. Current Trading Range and Target Price

Current Price: $73.76 (as of December 16, 2024)
52-Week Range: $49.34 - $76.73
Target Price: $90, representing a potential 22% upside, including dividends.
2. Technical Analysis Insights

The stock has shown strength near its 200-day moving average, with support at $70 and resistance at $76.
A breakout above $76 could signal further upside, aligning with the bullish target of $90.
3. Peer Comparison
Boyd Gaming’s valuation metrics, including a P/E ratio of 11.5x (2025 EPS), position it attractively compared to peers like MGM Resorts (P/E: 13.6x) and Wynn Resorts (P/E: 16.9x).

Risks and Considerations
1. Competitive and Market Risks
Boyd Gaming faces potential competition from new gambling regulations in neighboring states, which could impact its regional dominance. Additionally, economic uncertainties and external factors like severe weather or global health crises pose operational risks.

2. Leverage and Financial Strength
With a debt-to-equity ratio of 213.6%, the company’s financial strength rating remains low. However, steady cash flow and disciplined capital management mitigate these concerns.

Analyst Recommendation and Investment Outlook
Argus Research’s "Buy" recommendation for Boyd Gaming is underpinned by strong revenue growth, operational efficiencies, and a strategic focus on digital expansion. The target price of $90 reflects confidence in the company’s ability to capitalize on industry tailwinds, particularly in online gaming.