Caesars stock rating reiterated at Market Outperform by Citizens

Investing.com - Citizens has reiterated its Market Outperform rating on Caesars Entertainment (NASDAQ:CZR) with a price target of $41.00, citing potential leverage over VICI Properties regarding regional casino leases. Trading at $23, significantly below its 52-week high of $45.93, CZR shows potential upside according to analysts, whose targets range from $27 to $61. InvestingPro analysis reveals the stock is currently undervalued.

The firm points out that even if regional properties are currently generating slightly positive to neutral cash flow, annual escalators will eventually push these assets toward negative cash flow when including capital expenditures, which could incentivize Caesars to "hand back the keys" to VICI Properties .

Citizens notes that competitive pressures on these leased properties could intensify with the development of New York downstate casinos and potential revival of North Jersey casino discussions, which Caesars’ CEO expects once the New York venues are established.

The digital segment represents a bright spot for Caesars, with consensus expectations projecting digital EBITDA to increase to $428 million next year, while the company is expected to realize approximately $50 million in cost savings when its NFL marketing agreement concludes after the Super Bowl.

Citizens emphasizes that Caesars’ path forward is straightforward: generate free cash flow, reduce debt, and deleverage the company to improve valuation, noting that the current management team has demonstrated its ability to execute such strategies following merger and acquisition and capital expenditure cycles.

In other recent news, Caesars Entertainment has been the focus of several analyst updates and evaluations. Stifel recently adjusted its price target for Caesars to $43.00, citing discussions with company executives in Las Vegas and maintaining a Buy rating. Meanwhile, JPMorgan reiterated its Overweight rating with a $44.00 price target, highlighting that Caesars’ stock has hit a five-year low amid increased short interest. JMP Securities lowered its price target to $41.00, attributing the change to heightened marketing expenses in the company’s regional operations.

Conversely, Stifel raised its price target to $45.00, acknowledging the potential of Caesars’ digital business, which appears to be surpassing its $500 million target. TD Cowen also reiterated a Buy rating, setting a $40.00 price target, and noted the record quarterly EBITDA achieved by Caesars’ digital segment. These developments reflect a mixed outlook from analysts, with a focus on both challenges and opportunities in Caesars’ various business segments.

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