American casino operator Boyd Gaming reports mixed Q2 earnings

American casino operator Boyd Gaming reports mixed Q2 earnings

Nevada-based gaming & hospitality company Boyd Gaming Corporation has reported mixed earnings for the second quarter (Q2) of 2023. The gaming giant’s adjusted earnings before interest, taxes, depreciation, amortization and restructuring/ rent costs (EBITDAR) took a slight dip in the April-June quarter, but revenue increased 2.5 per cent year-over-year to $917 million. The iGaming top line growth was recorded at around 50 per cent. The regional casino operator missed analysts’ consensus estimates calling for earnings of 7 cents per cent. Sell-side analysts continue to be bullish on the Orleans operator.

Nevertheless, some analysts remain enthusiastic about the Boyd’s stock, even as softness was found in the South, where the company operates regional gaming properties in Mississippi and Louisiana.

Roth MKM analyst Edward Engel said in a statement that investors remained aware of macro risks, but he believed that the company could remain investors’ preferred regional casino stock, thanks to its healthy balance sheet, capital return profile, and stable end-markets.

Stifel analyst Steven Wieczynski added that Boyd could prove to be an outperformer in the regional gaming space for the predictable future if investors start taking more risks on this sector.

In a note to investors, Wieczynski stated, “If flocking to safety is what investors will start gravitating to moving forward, based on BOYD’s significant FCF generation and their pristine balance sheet, we believe BOYD could be an outperformer in the regional gaming space for the foreseeable future. With BOYD shares showing an ~10% FCF yield, we believe it’s a matter of time before investors catch on and understand shares remain undervalued when compared to peers.”

The senior analyst rated the Boyd stock a “buy” with a price target of $83, which implies upside move of more than 23 per cent from current levels.

In a response to an analyst’s question at the company’s latest earnings conference call, Boyd Chief Executive Officer (CEO) Keith Smith said his gaming company has grown through acquisitions, but the operator has always emphasized on discipline in deal-making. The top executive stressed that the company would continue to be very disciplined its approach to deal-making.

The Las Vegas-based gaming & hospitality giant, which is responsible for a number of popular gambling-friendly properties like Ameristar Casino & Hotel (Kansas City) and Belle Casino in Amelia (Louisiana), concluded the April-June quarter with $260.8 million cash on hand and $3 billion in liabilities.

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