2 casino stocks with more than 50% upside potential, according to Wall Street
Like most industries, the casino and gambling industry was hit hard last year by the COVID-19 pandemic. However, now that the restrictions related to the pandemic are significantly relaxed, the economic recovery is accelerating and people are going on vacation, casinos are seeing a substantial increase in foot traffic. The pent-up demand for games and gambling services could dramatically increase the revenues of casino operators in the coming months. Hence, the global gambling market is expected to reach $ 647.7 billion by 2025, with a CAGR of 7%.
With most gaming properties now operating at full capacity, customer revenue is expected to increase significantly. In addition, the continued evolution of online casinos is expected to drive the growth of casino operators.
Against this backdrop, Wall Street analysts are very optimistic about the growth prospects of the casino industry. Analysts expect popular casino stocks Boyd Gaming Corporation (BYD) and International Game Technology PLC (IGT) to recover by more than 50% in the coming months.
Boyd Gaming Corporation (BYD)
BYD is a multi-jurisdictional gaming company that operates through three lines of business: Las Vegas Locals, Downtown Las Vegas, and Midwest & South. The company operated 28 casinos in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Pennsylvania as of March 8, 2021. In addition, it owns and also operates a travel agency.
Last month, BYD and Hawaiian Airlines formed a new strategic collaboration that will allow members of BYD’s award-winning B Connected loyalty program and the carrier’s acclaimed HawaiianMiles program to earn even more benefits and rewards. Through this partnership, customers will have access to BYD’s exciting reward levels, exclusive player benefits and memorable entertainment experiences.
In the first quarter ended March 31, 2021, BYD’s revenue increased 10.7% year-on-year to $ 753.31 million. The company reported operating profit of $ 193.74 million, compared to an operating loss of $ 137.76 million the year before. Its net income was $ 102.16 million for this period, compared to a net loss of $ 147.56 million in the first quarter of 2020. BYD’s EPS was $ 0.9, compared with a net loss of $ 147.56 million in the first quarter of 2020. BYD’s EPS was $ 0.9. loss of $ 1.30 per share during the period of the previous year.
A consensus EPS estimate of $ 3.29 for the current year represents a significant year-over-year improvement. In addition, BYD has an impressive history of earnings surprises; it has beaten consensus EPS estimates in each of the past four quarters. The consensus estimate of revenue of $ 3.09 billion for the current year is a 41.7% increase over the same period last year. The stock has gained 199.3% in the past year and 64.9% in the past nine months.
Each of the six Wall Street analysts who provided ratings for the stock rated it Buy. Closing yesterday’s trading session at $ 51.64, the average analyst price target of $ 79.83 represents a upside potential of 54.6%.
BYD POWR odds reflect this promising outlook. The company has an overall A rating, which translates into a strong buy in our proprietary rating system. POWR ratings assess stocks based on 118 different factors, each with its own weight.
BYD also received an A rating for growth and a B rating for quality and sentiment. Within the Entertainment – Casinos / Gambling industry, it is ranked # 1 out of 30 stocks.
To see additional POWR ratings for momentum, stability, and value for BYD, Click here.
International Game Technology PLC (IGT)
IGT is a full-service gaming company that provides players with engaging gaming experiences across all channels and categories, from slots and lotteries to sports betting. Lottery management services, online and instant lottery systems, gaming systems and other business services are all part of the Company’s suite of gaming technology products and services. Global Lottery and Global Gaming are the two main lines of business through which the company operates.
This month, IGT announced the signing of a multi-year partnership with the Ute Mountain Casino Hotel to expand its sports betting presence in Colorado and Washington to fuel sports betting at Snoqualmie Casino in Snoqualmie. In addition, IGT will provide its market-leading PlaySports platform, self-service PlaySports kiosks and turnkey services under the terms of the agreement.
Additionally, this month IGT signed an agreement to supply 700 CrystalDual 27 video lottery terminals to the Western Canada Lottery Corporation. As part of the agreement, IGT will launch The Price is Right VLT content in Canada for the first time in Canada. This should allow the company to provide a fun gaming experience for gamers by allowing them to choose from various popular themes on a current platform.
In the first quarter ended March 31, 2021, IGT’s revenue increased 24.7% year-on-year to $ 1.01 billion. The company’s net profit was $ 92 million, compared to a net loss of $ 248 million in the prior year period. Its EPS stood at $ 0.38 for this quarter, compared to a loss of $ 1.28 per share of $ 1.28 in the first quarter of 2020. Adjusted EBITDA rose 72.4% from a year ago to $ 450 million during that time period.
Its EPS is expected to grow 265.3% year-over-year to $ 0.81 in the current year. Analysts expect IGT’s revenue to grow 23.6% year-on-year to $ 3.85 billion in its 2021 fiscal year. IGT stock gained 87.2% in the year. over the past year and 84.1% over the past nine months.
The three Wall Street analysts who provided ratings for the stock rated it buy. Their $ 32 consensus price target represents a potential gain of 69% from its last closing price of $ 18.94.
It’s no surprise that IGT has an overall rating of B, which equates to Buy in our POWR rating system. The stock also has a B rating for growth, value and momentum. In the Entertainment – Casinos / Gambling industry, it is ranked # 3 out of 30 stocks.
In addition to the POWR Ratings that we have just highlighted, we can see IGT rating for quality, stability and feeling here.
BYD shares were trading at $ 54.00 per share on Tuesday morning, up $ 2.36 (+ 4.57%). Year-to-date, BYD has gained 25.82%, compared to a 15.73% increase in the benchmark S&P 500 over the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college, she majored in finance and is currently pursuing the CFA program and is a Level II candidate. After…