JMP maintains Churchill Downs stock at Market Outperform, $157 target

On Thursday, JMP analysts maintained their Market Outperform rating on Churchill Downs stock (NASDAQ:CHDN) with a price target of $157.00. The analysts highlighted the company’s trading at 10.5 times its projected 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA), which they view as an opportunity for investors, given the stock’s current free cash flow (FCF) discount. According to InvestingPro data, the stock appears undervalued, currently trading at an EV/EBITDA multiple of 13x with last twelve months EBITDA of $886.9 million.

Churchill Downs, known for its iconic Kentucky Derby, has been recognized by JMP as a diversified entity with a strategic position in the gaming industry. The analysts pointed out the company’s improving leverage as a key factor in their positive outlook. InvestingPro analysis shows the company maintains a GOOD financial health score, with particularly strong profitability metrics. Notably, the company has achieved an impressive 11% revenue growth over the last twelve months.

The Market Outperform rating indicates that JMP analysts expect Churchill Downs stock to perform better than the average return of the stocks tracked by the firm over the next 12 to 18 months. The $157.00 price target suggests a level of confidence in the company’s potential to grow its value. InvestingPro data reveals the company has maintained dividend payments for 51 consecutive years, demonstrating long-term financial stability.

Churchill Downs has been focusing on expanding its gaming operations, which include casinos and online wagering platforms, in addition to its horse racing segment. This diversification strategy is seen as a move to strengthen its market position and financial performance.

Investors and market watchers will be keeping an eye on Churchill Downs stock as it continues to navigate the evolving landscape of the gaming and entertainment sectors. The company’s strategic initiatives and financial metrics will be crucial in determining whether it can achieve the growth anticipated by JMP analysts.

In other recent news, Churchill Downs has announced a $500 million share repurchase program, replacing a previous authorization with $125.6 million remaining. This move underscores the company’s confidence in its financial stability and commitment to shareholder value. Meanwhile, Stifel has adjusted its price target for Churchill Downs, lowering it from $161 to $142, but maintained a Buy rating. This revision reflects a decrease in expected Q1 Adjusted EBITDA due to adverse weather conditions, though Stifel remains optimistic about the company’s long-term prospects.

Barclays (LON:BARC) has initiated coverage on Churchill Downs with an Overweight rating and a price target of $125, citing a positive outlook on the company’s growth pipeline and market position. The firm anticipates that Churchill Downs’ expansion of the Kentucky Derby will generate strong returns. Additionally, Churchill Downs has renewed its partnership with Ford, extending through 2029, which includes exclusive naming rights and interactive experiences at the Kentucky Derby.

Stifel also adjusted a separate price target for Churchill Downs from $164 to $161 while maintaining a Buy rating, noting slower-than-expected growth in certain gaming revenues. Despite these adjustments, analysts believe the company’s long-term growth potential remains strong. Churchill Downs continues to focus on expanding its gaming operations and enhancing its iconic Kentucky Derby event.

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