Telsey: Full House Resorts Is Undervalued Despite Growth Potential From Recent Capital Spending

Full House Resorts, Inc. FLL has a number of growth projects in the final stages of construction, which should drive EBITDA higher on completion.

The Analyst

Telsey analyst Brian McGill initiated coverage of Full House Resorts with an Outperform rating and a $4 price target.

The Thesis

Full House Resorts stock is undervalued relative to the rest of the regional operators, especially given the potential for growth from its recent capital expenditures, McGill said in a note.

The addition of a number of non-gaming amenities to its properties should propel growth going forward, the analyst said. McGill said the company could see pent-up demand as the year progressive after a first quarter, which saw negative weather impact in several regional markets.

The analyst sees the company benefiting from strong regional gaming trends.

An impending approval for a hotel at the company's Bronco Billy's Casino will help long-term growth of the property, Telsey said. This is especially positive, as the Cripple Creek market in Colorado, where the casino is located is underserved from a hotel capacity standpoint.

The company's plan to move a portion of its gaming capacity to a new casino in Terre Haute, Indiana could serve as a positive catalyst, driving value for the company, the analyst said.

The Price Action

Full House Resorts shares are up about 39 percent over the past year.

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