The outlook for growth in 2024 for casino companies could be one key area to watch in the gaming space along with a favorable backdrop for online sports betting companies, an analyst said.

What Happened: JMP Securities analyst Jordan Bender shared the takeaways from the Global Gaming Expo in a new note, with the summaries of thoughts on companies in the casino, gaming and sports betting sectors after meetings with executives.

"Despite the underperformance from brick-and-mortar casino companies, commentary around the outlook and prospects for growth in 2025 skewed more positive than we had expected," Bender said.

Among the top takeaways from the event and meetings for the analyst are softness for regional casinos, the 2024 election being a headwind for the fourth quarter, Las Vegas not falling apart and a favorable view on data suppliers.

The analyst's top pick is Flutter Entertainment (NYSE:FLUT), raising the price target from $255 to $287 and maintaining a Market Outperform rating.

"Flutter's 2027 guidance was well-received, and we believe estimates are going to prove conservative in the absence of tax changes, reiterating our top pick call on the company as it currently trades at 9x its 2027E EBITDA guidance."

While Flutter is the top pick, the analyst shared three more stocks favored in the sector.

"We also recommend shares of GENI, CHDN and CZR as our favorite ways to own the gaming space."

Here are the current ratings and price targets on those three stocks from Bender:

• Genius Sports (NYSE:GENI): Market Outperform, $9 price target
• Churchill Downs (NASDAQ:CHDN): Market Outperform, $166 price target
• Caesars Entertainment (NASDAQ:CZR): Market Outperform, $59 price target

The analyst maintained Market Outperform ratings on MGM Resorts International (NYSE:MGM) and Golden Entertainment (NASDAQ:GDEN), but lowered the price targets with MGM from $57 to $56 and GDEN from $36 to $35.

Here's a look at the three stocks with new price targets and the other three top sector picks from the analyst.

Flutter Entertainment: Bender said feedback on Flutter continues to be positive with the key question now a matter of how big the total addressable market for online sports betting in the U.S. truly is.

"The $63bn TAM for the U.S. is not a 2030 estimate, rather a 10-year outlook for when the U.S. hits maturity," Bender said of Flutter's recent shared TAM figure.

The analyst said Flutter's free cash flow estimates for 2027 could be conservative.

"We believe the Flutter story continues to improve in the U.S. and rest of world as its scale will support outperformance in comparison to smaller companies in the space."

MGM Resorts International: The analyst said a declining supply of rooms in Las Vegas, new growth projects and a favorable convention backdrop for Las Vegas in 2025 is a positive for the company.

With DraftKings and Flutter holding a dominant duopoly position for online sports betting, the analyst sees a race for third place and a "desire for a podium position" for several companies including BetMGM, which is a joint venture from MGM and Entain.

Golden Entertainment: Summer heat and seasonality have hurt foot traffic for companies with higher exposure to Las Vegas, like Golden Entertainment, the analyst said.

"The company confirmed the headwinds, mostly during July."

Bender said a meeting with company executives showed optimism that stability is nearing in the fourth quarter.

The company's CFO said investors are not valuing all Golden Entertainment's assets based on the share price, the analyst added. The potential for mergers and acquisitions or an outright sale of the company could be on the table based on the analyst's conversation with management.

Genius Sports: Alongside Sportradar Group (NASDAQ:SRAD), the analyst sees Genius Sports as part of a duopoly for the online sports data supplier market.

"Our conversations with management teams only solidified our positive view on the two companies as both continue to build moats via the portfolio of technology."

Bender said the confidence and tone stood out while talking to Genius Sports.

"The Genius story has remained largely unchanged over the past three years, with management firmly believing that successful execution would lead to increased revenue and profitability."

Bender said the company's NFL contract is profitable and its major league sports rights are secured for many years.

Caesars Entertainment: A meeting with Caesars management was positive, Bender said.

"The company appears on the forefront of several new projects opening/ramping in the coming months, providing a series of catalysts for a mixed regional gaming segment."

The analyst said New Orleans revenue is under pre-renovation levels, but could return to levels comparable to 2019 with recent upgrades.

Churchill Downs: A headwind of the company's Virginia project could soon be coming to an end, the analyst said.

"The timing of the opening is still somewhat uncertain, but we get the sense the property will open to a more graduated opening in the coming weeks."

For the company's Kentucky Derby asset, the analyst said ticket pricing sees an uplift and advertising partnerships could grow.

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