Argus Research has reiterated a BUY rating for Boyd Gaming Corporation (NYSE: BYD), increasing the price target from $90 to $95. Boyd's strong earnings, supported by increased foot traffic in its Las Vegas, Midwest, and South properties, highlight its growth potential. Moreover, the company's leadership in the online sports betting market, including success through its partnership with FanDuel, positions it favorably. Fourth-quarter earnings showed revenue growth to $1.04 billion, driven by a 50% surge in online revenue. Boyd aims for long-term earnings growth of 12%, supported by ongoing property enhancements and favorable operating leverage.

Recent Financial Performance and Developments

Revenue and Earnings Growth

Boyd Gaming reported fourth-quarter 2024 revenue of $1.04 billion, up from $956 million the previous year. This was attributed to low-digit growth in its Midwest and South segments and a significant boost in online operations. Adjusted EBITDA increased by $23 million to $351 million, surpassing market expectations of $330 million. The operating margin declined slightly from 24.1% to 22.9%, reflecting increased costs.

Adjusted earnings per share (EPS) reached $1.96, exceeding the consensus estimate of $1.79.

Online Business Surge

Boyd's online gaming revenue soared over 50% to nearly $189 million, with adjusted EBITDAR climbing to $44.1 million from $17.3 million. This success underscores Boyd's dominance in online sports betting, driven by its collaboration with FanDuel.

Segment Analysis

Las Vegas Properties

Revenue in Boyd's Las Vegas Locals segment came in at $232 million, slightly down from $235 million but outperforming expectations of $224 million. This performance was aided by improved offerings at properties like Ameristar St. Charles and Gold Coast.

Midwest and South Operations

Revenue in the Midwest and South division rose to $518.5 million, although this fell short of the $571 million forecast. Adjusted EBITDAR rose to $192.4 million, demonstrating continued operational strength in key markets.

Long-Term Growth Strategy

Boyd Gaming is positioned to sustain a 12% long-term earnings growth rate, backed by continuous enhancements to its properties and favorable operating leverage in key regions. The company's renovation projects and growth in online gaming are expected to drive earnings per share to $6.75 in 2025 and $7.40 in 2026.

Technical and Valuation Analysis

Current Market Position

As of February 7, Boyd Gaming's stock traded at $77.22, with a 52-week range between $49.34 and $80.50. The stock's price-to-earnings (P/E) ratio is 11.44, suggesting it is trading below its historical average, providing an opportunity for value investors. The current valuation implies a potential 22% upside, including dividends, if the target price is achieved.

Support and Resistance Levels

Key technical indicators suggest support near $70, with resistance levels around $80.50. A breakout above this resistance could signal further bullish momentum.

Peer and Industry Comparison

Boyd Gaming competes with companies like MGM Resorts International, Wynn Resorts, and International Game Technology (IGT). While MGM has a broader market cap of over $10 billion, Boyd's strong earnings and online growth initiatives position it competitively. The company's emphasis on online sports betting provides a significant advantage over traditional gaming peers.

Financial Strength and Risks

Boyd maintains a cash balance of $317 million and total debt of $3.1 billion, resulting in a relatively high debt-to-capital ratio of 68.1%. Despite this leverage, the company has consistently returned value to shareholders, evidenced by share buybacks and a 6.3% dividend increase.

Risks

Key risks for Boyd include potential expansion of gambling laws in competing states, which could dilute its market share. Additionally, external risks such as severe weather events and global health crises could disrupt operations.

Dividend Outlook

Boyd Gaming recently raised its quarterly dividend to $0.17 per share, yielding approximately 0.9%. Future dividend growth is projected at 25.37%, with estimated payouts of $0.84 in 2025 and $0.96 in 2026.

Disclaimer

Investors are advised to conduct thorough due diligence and consult financial advisors before making investment decisions based on this analysis. Stock investments carry inherent risks, including market volatility and unforeseen business disruptions.