Gaming And Leisure REIT Upgraded To Overweight At Morgan Stanley

Morgan Stanley recently reanalyzed Gaming and Leisure Properties Inc GLPI as one of the three triple net REITs available at lower price and offers more catalysts. The recent MGP's IPO strengthened the gains from the gaming REITs.

Therefore, the brokerage upgraded the stock from Equal Weight to an Overweight rating. Similarly, Morgan Stanley lifted price objective from $36 to $38. In the last four quarters, the company's earnings have either met or topped estimates.

Analysts led by Vikram Malhotra believe GLPI shares are attractive, pointing out the Pinnacle Entertainment Inc PNK real estate deal. The analysts also think the company is well-positioned to extend its acquisition universe irrespective of the size of the transaction.

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In a research note to clients, Morgan Stanley said, "We estimate that GLPI's more broad approach, likely looking at assets that generate as little as $15m of EBITDA, suggests there are 91 potential acquisition opportunities. As one moves lower on the EBITDA scale, one also uncovers less institutional quality ownership. Such companies have less access to attractive debt yields, and hence, would potentially be more willing to sell to a REIT."

The brokerage believes GLPI is the third lowest triple-net multiple pointing out that the stock is trading at 11x 2017 estimate of AFFO despite enjoying the fourth biggest market cap. The company's dividend provided 7 percent yield and remained the third biggest in the sector.

The stock closed Tuesday's regular trading at $34.62. At time of writing Wednesday, the REIT was up 0.45 percent at $34.78.

Full ratings data available on Benzinga Pro.