It could use up a patch for Century Casinos (NASDAQ: CNTY) to recover lost resplendence but the sell-off that’s seen the inventory molt more than two-thirds of its note value o'er the past twelvemonth is too punitive.
That’s the submit of Stifel analyst Jeffrey Stantial, who inwards a new account to clients, reiterated a “buy” rating and a $5 damage mark on shares of the regional cassino operator. That calculate implies upside of 81.1% from the February 26 close. Stantial of late met with Century Co-CEO & Vice Chairman Saint Peter Hoetzinger, noting several of import takeaways.
Management is evaluating options to address/exploit perceived disruption in valuation and culmination of a license renewal cycle inwards Republic of Poland should help a potentiality sale,” observed the analyst.
Colorado-based Century owns most two-thirds of Casinos Poland, and it’s been more than ternion years since the companionship said it was looking for to divest that stake. That elbow grease was delayed by Russia’s encroachment of Ukraine in February 2022.
Century Casinos Stock Selloff Overdone
Down 40.37% year to particular date and nearly 70% removed from its 52-week high, Century has been I of the worst-performing cassino stocks geological dating rear to mid-2023.
Some of that drop-off is attributable to increased competition inward Reno and a slower-than-expected ramp-up stop inward Maryland, the operator’s two newest markets. However, a display case can live made that selling pressure level on the gunstock is excessive.
“While acknowledging underlying rudimentary headwinds, we believe recent underperformance & fears of financial distress are unreasonable and price reduction tapering one-time headwinds & paying back on ontogenesis capex. Normalized earnings power won’t be evident until FY25, though buybacks/insider purchases may help reinforcement sentiment/valuation to a greater extent near-term,” added Stantial.
Century’s fundamentals could be boosted inward the 2d half of this year as improvements occupy conformation at its II Missouri River gaming venues and the manipulator capitalizes on synergies at Nugget Sparks in Reno. The operator’s enhancements at its brace of Show Me State casinos could assist inwards gaining more traction with mid- to higher-tier clients.
Some Century Casinos Headwinds are Temporary
Century lately pre-announced fourth-quarter results that missed Wall Street forecasts but the atomic number 47 facing is that the downbeat numbers were for the most part attributable to temporary situations, videlicet construction at its Show Me State casinos and at Nugget Sparks.
As investors realise those situations aren’t lasting — and that with a market place note value of $88.35 million, Century is beingness priced past market place participants wellspring at a lower place the summation of its parts — the buy in could bring forth some near-term upside.
“Putting it all together, commentary end-to-end meetings tended to(p) suggests potentially more pronounced structural headwinds for CNTY vs. some regional peers,” concluded Stantial. “Still, this appears too discounted inward CNTY’s stream valuation, with a great deal of the FY24 Consensus revisions attributable to one-time headwinds. While normalized earnings force won’t live evident until FY25, we assure some more near-term catalysts for a potentiality sculptural relief rally.”
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