Churchill Downs stock holds $144 target post-Derby

On Monday, Churchill Downs (NASDAQ:CHDN), currently trading at $93.23, maintained its Market Outperform rating and a $144.00 price target from analysts at Citizens JMP, following the recent Kentucky Derby event. The iconic race, which is a pivotal moment in the Triple Crown series, took place on Saturday and has historically been a significant contributor to the company’s earnings. Analyst targets for the stock currently range from $115 to $156, according to InvestingPro data.

The Kentucky Derby, once responsible for a quarter to nearly a third of Churchill Downs’ annual EBITDA (which currently stands at $903.8 million), now accounts for only 13% of the projected 2025 property-level EBITDA. This shift is due to substantial growth in other business areas. Despite this, the Derby remains a focal point, especially after the company’s first-quarter earnings call. The earnings report and revised expectations for the Derby led to a 16% drop in Churchill Downs’ share price on the day of the announcement. Notably, the company maintains a perfect Piotroski Score of 9, indicating strong financial health according to InvestingPro’s comprehensive analysis.

The 151st Derby set records in wagering metrics, which are crucial as they represent around 20% of the Derby’s revenue. This includes bets placed on the Kentucky Derby Race itself, the entire Kentucky Derby Day Program, and the full week of Kentucky Derby Races. However, the event’s EBITDA saw a decline of $2 million to $4 million. This decrease contrasts with the $27 million growth in 2024 and $15 million growth in 2023.

Despite these figures, Citizens JMP’s analysts have adjusted their estimates, now modeling a $1 million decline in track EBITDA for the quarter, which is slightly more than what was anticipated following the earnings revision. The Kentucky Derby’s performance and its impact on Churchill Downs’ financials continue to be closely monitored by market analysts and investors alike. With the stock trading at a P/E ratio of 15.78 and currently showing signs of being undervalued according to InvestingPro’s Fair Value model, investors seeking detailed analysis can access the comprehensive Pro Research Report, available exclusively to subscribers.

In other recent news, Churchill Downs Incorporated reported its first-quarter 2025 earnings, revealing a miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $1.02, falling short of the forecasted $1.11, and revenue came in at $642.6 million, below the expected $649.69 million. Despite this, the company achieved record first-quarter net revenue of $643 million and adjusted EBITDA of $245 million. In response to macroeconomic uncertainties, Churchill Downs has postponed its $900 million Churchill Downs Racetrack project, opting instead for a smaller Finish Line/Mansion project estimated to cost between $25 and $30 million.

Analyst firms have weighed in on these developments. Mizuho (NYSE:MFG) Securities adjusted its price target for Churchill Downs to $137, down from $140, while maintaining an Outperform rating. The firm noted the company’s mixed earnings results and less optimistic forward-looking statements. Meanwhile, Stifel analysts maintained a Buy rating with a price target of $142, viewing the postponement of the major project as a cautious move amid economic volatility. They also highlighted robust growth in Kentucky HRM operations and improvements in Exacta Systems.

Churchill Downs continues to focus on growth opportunities despite the challenges. The company has revised its 2025 capital spending projections and expects its net leverage to remain around 4x in 2025, with a projected decrease to 3.6-3.8x in 2026. The strategic postponement of the racetrack project is seen as a temporary measure, with plans to reassess the economic conditions before proceeding.

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