Gold prices cool after hitting over 2-week high on Fed independence fears
On Tuesday, JMP analysts issued an update on Churchill Downs (NASDAQ:CHDN), reducing the price target from the previous $144.00 to $138.00 while maintaining a Market Outperform rating on the stock. The adjustment follows a discussion with the management of the company, leading to revised earnings estimates. The stock, currently trading at $93.24, appears undervalued according to InvestingPro analysis, despite falling 33% over the past six months.
The Louisville-based gaming company, known for the famous Kentucky Derby, recently made a decision to remove its Historical Racing Machines (HRMs) from Louisiana. This move is estimated to impact the company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) by $10 million to $15 million annually, a relatively small portion of the company’s total EBITDA of $903.8 million. Despite this setback, analysts noted that Churchill Downs is actively engaging in efforts to recover the lost earnings. InvestingPro data reveals the company maintains a perfect Piotroski Score of 9, indicating strong financial health.
JMP analysts clarified that the removal of HRMs in Louisiana is not indicative of any legal issues and does not reflect on the broader operations of the company. The action taken by Churchill Downs is seen as isolated and not representative of its legal standing or its overall business health.
In addition to the changes in Louisiana, the analysts have also made slight adjustments to their estimates for the Churchill Downs Racetrack earnings post the Kentucky Derby. The Kentucky Derby is a significant event for the company, drawing substantial attention and revenue, and the performance during this event can influence financial forecasts.
Churchill Downs has not publicly responded to the revised price target. The company’s stock performance following this update will continue to be monitored by investors and analysts alike. The next earnings report, scheduled for July 23, will likely provide further insights into the company’s financial health and the effectiveness of its strategies to mitigate the impact of the HRMs removal. With revenue growth of 11.75% and a P/E ratio of 15.78, InvestingPro offers 12 additional investment tips and comprehensive analysis in its Pro Research Report, available to subscribers.
In other recent news, Churchill Downs has reported record-breaking wagering numbers for the Kentucky Derby Day program and Derby Week, with total wagers reaching $349.0 million and $473.9 million, respectively. Despite these impressive figures, the company anticipates a decrease in Adjusted EBITDA for Derby Week by $2 to $4 million compared to the previous year, a decline attributed to adverse weather conditions and softer-than-expected pricing. Analysts from Truist Securities and BofA Securities have maintained their Buy ratings on the stock, with price targets set at $150 and $115, respectively, citing potential future growth driven by new projects and contracts.
Meanwhile, Mizuho (NYSE:MFG) Securities has adjusted its price target for Churchill Downs to $137, down from $140, while maintaining an Outperform rating. This decision follows mixed earnings results that fell short of some expectations, particularly in the Gaming EBITDA segment. Stifel analysts have also maintained their Buy rating with a price target of $142, noting a 2% increase in adjusted EBITDA for the first quarter of 2025. The company has postponed its $900 million Churchill Downs Racetrack project in favor of a smaller $25 to $30 million Finish Line/Mansion project, a move seen as prudent amidst macroeconomic uncertainties.
Furthermore, Citizens JMP has kept its Market Outperform rating and a $144 price target, acknowledging the Derby’s significant contribution to the company’s earnings despite its decreasing share of overall EBITDA. As Churchill Downs navigates these developments, analysts continue to monitor the company’s strategic decisions and financial performance closely.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.