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Investing.com - JPMorgan initiated coverage on Red Rock Resorts (NASDAQ:RRR) with an overweight rating and a $62.00 price target on Monday. The casino operator, currently trading at $50.23, has demonstrated strong momentum with a nearly 13% return over the past six months. According to InvestingPro analysis, the company’s financial health is rated as GOOD, supported by impressive gross profit margins of 66.59%.
The investment bank cited potential 4-5% upside to 2026-2027 estimates as the company generates returns on its approximately $375 million capital expenditure projects and as disruption from these projects fades.
JPMorgan noted the possibility of an uptick in Las Vegas locals gaming market from the Trump Administration’s new tax bill, which could benefit Red Rock’s operations.
The firm highlighted Red Rock’s attractive organic growth pipeline in a market that remains insulated from new supply and competition risks, providing stability to the company’s expansion plans.
JPMorgan also pointed to Red Rock’s implied 2026 estimated free cash flow yield of 9.5%, which the firm considers reasonable given the quality of the company’s assets. With a market capitalization of $5.13 billion, Red Rock Resorts is among the 1,400+ US stocks covered by comprehensive InvestingPro Research Reports, offering detailed analysis of the company’s financial health and growth prospects.
In other recent news, Red Rock Resorts reported its first-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $0.75 compared to the forecasted $0.48. The company’s consolidated net revenue reached $497.9 million, slightly below the expected $499.25 million. Despite the revenue miss, Red Rock Resorts’ Las Vegas operations saw a 1.9% year-over-year revenue increase. Mizuho (NYSE:MFG) analysts upgraded the company’s stock rating to outperform from neutral, setting a new price target of $50.00. This upgrade reflects optimism about the company’s prospects, including the potential benefits from legislative changes and earnings acceleration from the North Fork management agreement. Additionally, Red Rock Resorts’ shareholders recently approved board nominees and an advisory vote on executive compensation, indicating strong support for the company’s leadership. The ratification of Ernst & Young LLP as the independent auditor for the fiscal year ending December 31, 2025, was also approved. These developments highlight Red Rock Resorts’ ongoing strategic focus and financial performance.
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