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Investing.com - JPMorgan initiated coverage on Caesars Entertainment (NASDAQ:CZR) with an overweight rating and set a price target of $47.00 on Monday. The stock, currently trading at $28.15, sits well below its 52-week high of $45.93, with analysts setting targets ranging from $28 to $62.
The investment bank cited Caesars’ potential to generate significant free cash flow through 2027, potentially amounting to more than 50% of the company’s current market capitalization of $5.85 billion. This cash generation is expected to benefit shareholders through debt reduction or capital returns, particularly important given the company’s debt-to-equity ratio of 6.4x. According to InvestingPro, net income is expected to grow this year, with analysts forecasting a return to profitability.
JPMorgan noted that Caesars stock currently trades at a heavily discounted valuation. The firm’s analysis suggests that even when assigning no value to Caesars’ operating company assets, a fair value in the mid-$40s is justified.
The research highlighted Caesars Digital as a particular strength within the company’s portfolio. JPMorgan identified Caesars as the only omni-channel operator in its sector to achieve meaningful profitability in its digital operations.
Caesars Entertainment operates casino-resorts across the United States and offers online sports betting and iGaming services through its digital division.
In other recent news, Caesars Entertainment reported first-quarter earnings that did not meet Wall Street expectations, with a normalized EPS of -$0.48, missing the consensus estimates by $0.30. However, the company’s revenue slightly exceeded projections, reaching $2.79 billion against the expected $2.74 billion. CFRA analyst Zachary Warring downgraded Caesars’ stock from Buy to Hold, reducing the price target to $30, citing concerns over earnings per share estimates and balance sheet issues. Meanwhile, TD Cowen reiterated a Buy rating with a $40 price target, highlighting Caesars’ strong cash flow and digital business potential. JMP Securities maintained a Market Outperform rating with a $45 price target, emphasizing the company’s strategic positioning and resilience in the face of macroeconomic challenges. Stifel analysts also adjusted their price target to $42 from $51, while keeping a Buy rating, due to concerns over consumer spending and debt levels. Despite these challenges, Stifel sees long-term value in Caesars’ shares, noting potential free cash flow expansion and digital platform monetization. Caesars continues to focus on optimizing its diverse revenue streams, including gaming and non-gaming activities, as it navigates the evolving market landscape.
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