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On Wednesday, CFRA analyst Zachary Warring upgraded the rating for Caesars Entertainment (NASDAQ:CZR) from Sell to Hold and increased the price target from $27.00 to $39.00. The revision reflects CFRA’s anticipation that Caesars will continue to trade around its near-term multiple until it can reduce its interest expenses and debt load. This outlook is based on 8.5 times the firm’s 2025 adjusted EBITDA estimate, aligning with the company’s two-year average forward EV/EBITDA estimate of 8.7 times. According to InvestingPro data, the company currently carries a concerning debt-to-equity ratio of 6.29x, with short-term obligations exceeding liquid assets, as reflected in a current ratio of 0.84.
The analyst maintained the 2025 earnings per share (EPS) estimate at $0.75 and introduced a 2026 EPS estimate of $1.00. Caesars reported normalized earnings for the fourth quarter of 2025 at ($0.47) per share, which fell short of consensus estimates by $0.35, with revenues of $2.80 billion slightly below the expected $2.83 billion by $15 million. Revenue performance varied across segments, with Las Vegas revenues remaining flat year-over-year, Regional revenues experiencing a 1.5% decline, and Digital revenues also showing no growth.
The company’s fourth-quarter adjusted EBITDA decreased by 4.5% year-over-year to $882 million. Caesars’ balance sheet was highlighted as a concern, with an EBIT/Interest coverage of only 1.1 times in 2024. Despite these challenges, management’s commentary regarding the first quarter of 2025 and the full year was positive, leading CFRA to anticipate slightly higher EBITDA for 2025.
Warring’s report concluded with a cautious stance, despite the raised opinion on Caesars stock. The adjustment in rating and price target comes as the analyst projects a steady trading pattern for Caesars’ shares in the near term, contingent upon the company’s progress in managing its financial obligations. For deeper insights into CZR’s valuation and financial health metrics, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes additional analysis of the company’s debt structure and growth prospects.
In other recent news, Caesars Entertainment reported its fourth-quarter 2024 earnings, revealing an earnings per share (EPS) of $0.05, which significantly surpassed analyst projections of $0.01. Despite this earnings beat, the company faced a revenue shortfall, reporting $2.8 billion against the expected $2.89 billion. Caesars’ Las Vegas operations maintained high occupancy rates, though adjusted EBITDAR in the region dipped by 1% year-over-year. The digital segment, however, showed robust growth with a 20% increase in net revenue compared to the previous year. JMP analysts maintained their Market Outperform rating for Caesars, with a price target of $53, despite the mixed results, noting that the company’s EBITDAR was below consensus estimates due to weaker-than-expected Las Vegas performance.
The analysts also highlighted that Caesars’ digital segment faced an approximate $40 million impact on EBITDA due to unfavorable game outcomes. Looking forward, Caesars management expects an improvement in brick-and-mortar EBITDAR throughout the year. The company is also focused on debt reduction and strategic investments, projecting free cash flow around $1 billion for 2025. Analysts from JMP expressed optimism about Caesars’ prospects, particularly due to its strong positioning in Las Vegas for 2025 and signs of stabilization in regional customer engagement.
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