Golden Entertainment Inc GDEN's American Gaming deal moved the company further into the casino space, increasing its bet on the Nevada economy, an analyst at Telsey Advisory Group said.
The Analyst
Telsey analyst Brian McGill initiated coverage of Golden Entertainment with an Outperform rating and a $32 price target.
The Thesis
Golden Entertainment's focus on the strong growth areas throughout Las Vegas and the rest of the Nevada is positive, McGill said in a note. The analyst said the company can now delever and look for additional acquisitions.
The company is also poised to benefit from the legalization of video gaming terminals in several states, the analyst added.
Delving on the American Gaming acquisition, the analyst said it has given the company a Las Vegas strip property in the Stratosphere, two properties in the Las Vegas Locals market, with Arizona Charlie's, and Aquarius, a property in Laughlin, Nevada.
The analyst sees Stratosphere benefiting from the spending to improve the quality of rooms, with the other areas of the property also likely to be upgraded to improve results. Meanwhile, increasing employment, population growth and strong housing market gains in the Las Vegas locals market could benefit properties in the market, McGill said.
Overall, Telsey said it likes the outlook for the combined company.
The Price Action
Golden Entertainment shares have more than doubled over the past year.
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