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On Thursday, Churchill Downs (NASDAQ:CHDN), the $8.8 billion market cap gaming company, received a reaffirmation of its Market Outperform rating and $166.00 price target from Citizens JMP, following the company’s financial performance in the fourth quarter of 2024. Churchill Downs reported a slight increase in revenue and EBITDA, with both metrics rising by 1% compared to consensus expectations. The company’s fourth-quarter EBITDA reached $237 million, exceeding analyst forecasts. According to InvestingPro data, the company has maintained strong profitability with trailing twelve-month EBITDA of $899.9 million and revenue growth of 11.07%.
The positive financial results were largely attributed to the company’s Gaming division, which outperformed consensus by 2%, and its Wagering Services and Solutions segment, previously known as TwinSpires, which surpassed expectations by 3%. These segments contributed significantly to the overall earnings beat during the quarter. InvestingPro analysis shows the company maintains a GOOD financial health score, with particularly strong profitability metrics. InvestingPro subscribers can access 8 additional key insights about Churchill Downs’ financial position.
Despite the favorable figures in these areas, Churchill Downs’ Live and Historical Racing segment did not meet consensus estimates, falling short by 2%, or approximately $1 million. This shortfall was attributed to a specific charge related to government relations incurred during the quarter.
The analysis from Citizens JMP also highlighted particular interest in the earnings before interest, taxes, depreciation, and amortization (EBITDA) margins of two areas within the company. The Rose’s EBITDA margin performed slightly better than anticipated, and the Virginia Historical Racing Machine (HRM) margin, excluding the Rose’s performance, achieved a notable 51%, exceeding the expectations set in the firm’s financial model.
Churchill Downs’ financial results and the subsequent analyst commentary underscore the company’s ability to exceed expectations in key segments of its business, despite minor setbacks in other areas. The maintained price target of $166.00 reflects the analyst’s continued confidence in the company’s performance and market position. With analyst targets ranging from $148 to $172 and a strong consensus recommendation, InvestingPro’s Fair Value analysis suggests the stock is currently undervalued. For deeper insights, investors can access Churchill Downs’ comprehensive Pro Research Report, part of InvestingPro’s coverage of over 1,400 US stocks.
In other recent news, Churchill Downs Incorporated has been active with several developments impacting its financial outlook and strategic initiatives. Mizuho (NYSE:MFG) Securities recently adjusted its financial projections for the company, lowering the price target from $151 to $148 while maintaining an Outperform rating. The revision was driven by updated expectations for the fourth quarter of 2024 and the year 2025, with adjusted EBITDA estimates being revised downward due to factors such as marketing costs and construction delays.
Churchill Downs has also negotiated an amendment to its senior secured credit agreement, resulting in a reduced interest rate margin on its Term Loan B-1. This strategic financial move aims to optimize borrowing costs and reflects the company’s efforts to manage its capital structure efficiently. Meanwhile, Truist Securities has reiterated its Buy rating for the company, citing strong potential at the new $460 million The Rose Gaming Resort in Virginia. The firm believes that Churchill Downs could meet or surpass its initial financial projections for this property over time.
Additionally, Stifel has reaffirmed its Buy rating and $164 price target for Churchill Downs, highlighting the company’s prospects for surpassing consensus estimates for 2025 and 2026. The firm’s optimism is based on the company’s ongoing capital projects and potential legislative changes that may enhance gaming capacity in Virginia. These recent developments underscore Churchill Downs’ strategic focus on growth and financial management.
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