Caesars Stock Remains Analyst Fave Despite Tepid Q2 Results

Caesars Entertainment (NASDAQ: CZR) didn’t pick apart the underwrite cancelled the glob Tuesday with its second-quarter results. But the stock remains a gaming favorite of sell-side analysts.

In midday trading on Wednesday, shares of the Horseshoe manipulator are take down by more than 4%, connexion the broader gaming equity coordination compound to the downside. However, multiple analysts lifted toll targets on Caesars today, despite lethargic second-quarter results caused past some toughened year-over-year comparisons. Stifel psychoanalyst Steven Wieczynski remains surefooted in Caesars management, led by CEO Tom Reeg.

With CZR you receive the topper direction squad in gaming and a company that should green goods significant release hard currency flow rate inwards any normalized environment,” wrote the analyst. “We believe the keep company can delever their equilibrium shroud which should inwards bout play longer-term investors into this story.”

Wieczynski reiterated a “buy” rating on the stock, boosting his terms target to $74 from $68. That new calculate implies upside of around 27.5% from the Aug 1 close.

Debt Reduction Can Drive Caesars Stock Story

For years, Caesars has been ace of the to the highest degree indebted companies inwards the gaming industry. Altering that profile for the break is a upper side antecedence for management, and advancement is being made on that front.

At the remnant of the first quarter, the gaming companionship had $13.2 billion in debt. As of June 30, that enter was shoot down to $12.7 billion. Caesars also had $1.1 one thousand million inward cash, non including qualified cash in of $205 million.

Those efforts, which could be spurred past an eventual plus sale, are being lauded past analysts and could put Caesars on a path to bring forth $5 one thousand million in earnings before interest, taxes, depreciation, and amortization (EBITDA) inward 2025. That implies purchase inward the depression 3x expanse and free immediate payment flowing inwards the expanse of $12 a share.

“We persist in to advocate CZR precondition the deleveraging story, Vegas strength, and Digital course to profitability,” noted Macquarie analyst Republic of Chad Beynon. “While some may query CZR’s aspirational $5bn 2025E EBITDA figure, we trust the deleveraging story is more concrete as Digital is now self-funding and on the way of life to profitability.”

In unity of the smart spots in the second-quarter earnings report, Caesars Digital notched its first profitable quarter.

Caesars Long-Term Outlook Attractive

For now, investors considering Caesars hold to postulate with the company’s large, though declining, debt burden and its on-going battles against the specters of macroeconomic headwinds and increasing rivalry inwards some regional gambling casino markets. On the other hand, the long-term outlook is arguably compelling.

That includes release hard currency rate of flow eventually group meeting or olympian expectations, potentially positioning the Harrah’s operator to repurchase shares or explore accretive transactions.

“What will receive to a greater extent attention are some comments that CZR’s CEO made inwards which he indicated that over the next couple on of years, the companionship could be in a place to explore ‘external opportunities,’” concludes Wieczynski. “What doh those comments mean? We aren’t exactly sure, and we don’t trust on that point is anything coming imminently. But we do believe those comments should live taken seriously, and trust it’s a subscribe that CZR’s FCF multiplication should be so strong inward the out-years that it will allow them to not only delever and buy back up shares, but also explore other ‘material’ options.”

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