U.S. stocks lower as investors rotate out of tech ahead of Jackson Hole
On Wednesday, Citizens JMP reiterated a Market Perform rating for Bally’s Corp (NYSE:BALY), a company that has expanded significantly through acquisitions in the casino and digital asset sectors. With a market capitalization of $822 million and annual revenue of $2.45 billion, Bally’s has become one of the largest regional gaming entities in the United States and has established an online presence in the U.S. and various international markets. According to InvestingPro data, the company currently trades near its Fair Value, though it faces profitability challenges in the current environment.
The focus for Bally’s moving forward is its development pipeline, which includes transitioning two riverboat casinos to land within the Casino (EPA:CASP) Queen portfolio and the ambitious downtown Chicago project. The Chicago development has a remaining budget of $1.4 billion and is expected to open in 18 months. Citizens JMP is looking for further clarity on the potential returns from these projects before adopting a more positive stance on the company’s shares. InvestingPro analysis reveals concerning financial health metrics, with a debt-to-equity ratio of 159.8 and current ratio of 0.66, indicating significant financial obligations that could impact project execution.
Bally’s also has several other significant opportunities on the horizon, such as the possibility of obtaining a gaming license in downstate New York, anticipated in the second half of 2025, and the potential to develop a casino/resort in Las Vegas, although the timing for this remains uncertain. Additional prospects include pending financing from a Major League Baseball team and potential ownership of The Star casino assets in Australia.
Gaming and Leisure Properties (NASDAQ:GLPI), Bally’s real estate investment trust (REIT) partner, is crucial to the financing of several growth projects. As these casinos are developed and opened, Bally’s rent obligations are expected to rise. Citizens JMP forecasts that Bally’s will generate free cash flow (FCF) in the upcoming years, trading at a 6% FCF yield based on the firm’s 2026 FCF estimates. However, lease-adjusted leverage is projected to increase to 7.6x at the end of 2025 and 7.1x at the end of 2026, which could restrict the company’s financial flexibility as it pursues these various opportunities. For deeper insights into Bally’s financial health and development progress, access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of the company’s growth strategy and risk factors.
In other recent news, Bally’s Corporation reported fourth-quarter revenue of $580.4 million, falling short of the analyst consensus estimate of $610.63 million. This represents a 5.1% decrease year-over-year, with the Casinos & Resorts segment declining by 5.2% to $324.4 million and International Interactive revenue dropping 9.1% to $214.5 million. Despite these challenges, North America Interactive saw a 24.4% revenue increase, though it still reported an adjusted EBITDAR loss of $12.3 million.
In a strategic move, Bally’s announced the appointment of Mira Mircheva as the new Executive Vice President and Chief Financial Officer, pending regulatory approval. Her extensive experience in the financial sector is expected to enhance Bally’s operations and financial strategies. Analyst firms Barclays (LON:BARC) and Stifel both revised their price targets for Bally’s shares to $14.00, citing weaker-than-expected fourth-quarter performance and the complexity of forecasting future financials.
Barclays maintained an Equalweight rating, while Stifel kept a Hold rating, reflecting ongoing challenges in the Casino & Resorts segment and the uncertainty surrounding Bally’s financial outlook. The company also highlighted progress on growth initiatives, such as the construction of a permanent Chicago casino and the completion of demolition at the former Tropicana site in Las Vegas. Bally’s recent acquisitions, including The Queen Casino & Entertainment, are expected to contribute significantly to its future revenue and EBITDAR.
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