Oil prices hold sharp losses with focus on secondary India tariffs
On Tuesday, CFRA analyst Zachary Warring upgraded Caesars Entertainment (NASDAQ:CZR) stock rating from Buy to Strong Buy, setting a 12-month price target of $39.00. The new target is based on 8.5 times CFRA’s 2025 EBITDA estimate for the company, which is below Caesars’ three-year average forward EV/EBITDA multiple of 9.2x. This adjustment comes despite concerns over a weaker U.S. consumer and an extended balance sheet. According to InvestingPro data, the stock is currently trading at $27.73, near its 52-week low of $26.42, with analyst targets ranging from $30 to $62.
Warring maintained the EPS estimates for Caesars Entertainment at $0.75 for 2025 and $1.00 for 2026. The upgrade in valuation opinion follows a significant 40% decline in the company’s shares over the past six months, with InvestingPro data showing a precise decline of 30.71%. The current share price is at the lower end of its five-year range, which Warring believes indicates that investors are factoring in the possibility of a recession. The stock’s high volatility is evident in its beta of 2.97.
Caesars Entertainment’s balance sheet has not been a source of enthusiasm for CFRA, as the firm suggests that the company could benefit from selling underperforming assets to raise cash and reduce debt. Such a move would potentially increase earnings by lowering interest payments. InvestingPro analysis reveals a substantial total debt of $25.8 billion and a concerning debt-to-equity ratio of 6.2, highlighting the urgency for debt reduction. Additionally, CFRA forecasts stability in the Las Vegas market over the next year.
Despite the balance sheet concerns, CFRA sees an emerging value in Caesars Entertainment’s shares. Warring notes that while the balance sheet has been a constraint, the potential for asset sales to improve net income and investor confidence cannot be overlooked, especially as there are some indications of weakness in the U.S. consumer spending. This value proposition is supported by InvestingPro’s Fair Value analysis, which suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report.
In other recent news, Caesars Entertainment has been the subject of several analyst reviews and strategic developments. CFRA upgraded Caesars’ stock rating from Sell to Hold, raising the price target to $39, while noting concerns over the company’s debt and interest expenses. Meanwhile, Raymond (NSE:RYMD) James cut its price target for Caesars to $49 but maintained a Strong Buy rating, citing the company’s potential for significant value creation through debt reduction and digital operations. Stifel continues to support Caesars with a Buy rating and a $51 price target, emphasizing the company’s growth potential despite economic challenges.
TD Cowen also maintained a Buy rating with a $48 target, highlighting the potential value creation from a possible digital spin-off or IPO. On the operational front, Caesars Entertainment launched a new branded version of Pixiu Gaming’s Keno, expanding its online casino offerings. This move aligns with Caesars’ strategy to enhance its digital presence and engage players through unique gaming experiences. The recent earnings report revealed mixed results, with Regional operations exceeding forecasts, while Las Vegas and Digital segments underperformed expectations.
Caesars’ fourth-quarter adjusted EBITDA saw a 4.5% year-over-year decline, with revenues slightly missing estimates. Despite these challenges, analysts remain optimistic about Caesars’ strategic initiatives and potential for shareholder value enhancement. The company’s ongoing efforts to manage its financial obligations and explore strategic alternatives for its digital segment remain focal points for investors.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.