D-Wave Quantum falls nearly 3% as earnings miss overshadows revenue beat
On Wednesday, JMP analysts maintained their Market Outperform rating for Caesars Entertainment (NASDAQ:CZR), with a steady price target of $53.00. The stock, currently trading at $34.87, has experienced an 8.2% decline over the past week, according to InvestingPro data, which indicates the company is currently undervalued. The firm’s analyst noted that Caesars’ company-wide EBITDAR of $882 million fell short of consensus estimates by 3%, led by weaker-than-expected results from its Las Vegas operations. Revenue and EBITDAR from Las Vegas were both below expectations, with year-on-year declines of 4% and 6%, respectively. With a significant debt burden and a debt-to-equity ratio of 6.29, the company’s financial flexibility remains constrained.
The digital segment of Caesars’ business was also affected, with an approximate $40 million impact on EBITDA due to unfavorable game outcomes. This led to a shortfall relative to market expectations, although it aligned with JMP’s projections. Despite these challenges, the regional EBITDAR performance matched what was anticipated by analysts.
JMP’s commentary highlighted that the outlook for Las Vegas and regional markets is consistent with competitors, suggesting an improving situation in 2025. Management at Caesars is expecting an uptick in brick-and-mortar EBITDAR throughout the year. The analysts expressed a favorable view of Caesars’ prospects, particularly due to its strong positioning in Las Vegas for 2025 and signs of stabilization in regional customer engagement. Analyst targets range from $33 to $66, with a consensus recommendation leaning towards Buy. For deeper insights into Caesars’ financial health and growth prospects, explore the comprehensive analysis available on InvestingPro.
In other recent news, Caesars Entertainment announced its fourth-quarter 2024 earnings, revealing an earnings per share (EPS) of $0.05, which surpassed analyst expectations of $0.01. However, the company experienced a revenue shortfall, reporting $2.8 billion compared to the anticipated $2.89 billion. Despite the revenue miss, the digital segment of Caesars showed a promising 20% growth in revenue year-over-year. Analysts from Deutsche Bank (ETR:DBKGn) and Jefferies expressed interest in the company’s strategic focus on debt reduction and potential stock buybacks. Caesars’ Las Vegas operations maintained a strong performance with a 96% room occupancy rate, although adjusted EBITDAR in the region saw a slight decline of 1% year-over-year.
The company also highlighted that its digital segment achieved record net revenue of $1.2 billion for the year, with adjusted EBITDA reaching $117 million, up from $38 million the previous year. Caesars executives emphasized ongoing investments in property upgrades and digital growth, anticipating a significant increase in free cash flow in 2025. The company’s strategic priorities include managing expenses and exploring monetization opportunities in the digital segment. Additionally, Caesars reported that it repaid $500 million in debt using proceeds from non-core asset sales, aligning with its focus on financial discipline.
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