Credit Suisse Reiterates Outperform, $20 Target on Boyd Gaming Heading Into Q3 Results

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  • Boyd Gaming Corporation BYD shares have surged 39.62 percent year-to-date, reaching a high of $17.99 on August 17.
  • Credit Suisse’s Joel Simkins reiterated an Outperform rating on the company, while maintaining a price target of $20.
  • Recent channel checks and monthly gaming data suggest sustained topline growth, which Simkins believes could help Boyd Gaming beat the consensus expectations for Q3.

Analyst Joel Simkins mentioned that the company has been demonstrating “solid operational execution,” year-to-date, with margins expected to expand further during 3Q15.

“In addition to strategic changes to its marketing spend, reinvestment in non-gaming amenities and same-store improvement projects across the portfolio will continue to boost results,” Simkins stated.

As the decline in gas prices and the favourable consumer environment continue to drive higher visitation/spend per trip, Simkins expects Boyd Gaming to diversify into non-gaming amenities, which would help the company increase its wallet share.

The recovery the Las Vegas market trends is beginning to gain momentum, but trends are still below the peak levels seen in the last decade; Simkins believes that there could be upside into 2016.

The sector is expected to benefit from “economic growth in Las Vegas, volume around the Strip and a rational competitive environment,” the Credit Suisse report said.

Recently, revenues from the Strip have lagged Local gaming revenues. Simkins pointed out that this slowdown was more due to “less baccarat play” rather than increased visits to Las Vegas, “which have historically fuelled the locals markets.”

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Posted In: Analyst ColorReiterationAnalyst RatingsCredit SuisseJoel Simkins
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