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On Tuesday, Mizuho (NYSE:MFG) Securities adjusted its financial outlook for Churchill Downs (NASDAQ:CHDN), reducing the price target on the company’s shares to $140 from the previous figure of $148. The firm, however, chose to sustain its Outperform rating on the stock. According to InvestingPro data, the stock is currently trading near its 52-week low of $96.67, with analyst targets ranging from $125 to $172. The revision arrives amidst a reassessment of the company’s expected financial performance, with particular attention to operations in Virginia.
Mizuho analysts have revised their first-quarter 2025 adjusted EBITDA forecast for Churchill Downs to $246 million, a decrease from the prior estimate of $254.6 million. This new projection stands slightly below the consensus estimate of $247.7 million among other analysts. For context, the company’s last twelve months EBITDA stands at $886.9 million, with revenue growing at 11.07%. Additionally, Mizuho has adjusted its full-year 2025 adjusted EBITDA prediction for the company to $1.19 billion from $1.24 billion, compared to the consensus estimate of $1.22 billion. InvestingPro subscribers can access 13 additional key insights and a comprehensive analysis of Churchill Downs’ financial health, which currently rates as GOOD.
The decision to revise these projections stems from a more cautious view on the trends affecting Churchill Downs’ operations in Virginia, excluding the Rose gaming facility. The stock has experienced significant pressure, declining 25.28% over the past six months. Factors influencing this outlook include challenging year-over-year comparisons, such as the previous benefits from Exacta and the impact of removing certain gaming machines. The performance in the first quarter was further hampered by unfavorable weather conditions experienced in January and February.
Moreover, Mizuho has identified potential risks that could impact future results, including the possible re-emergence of "gray games" – a reference to gaming machines operating in a legal gray area – and the implications of DOGE cryptocurrency adoption in the Washington, D.C., and Virginia markets. Despite these concerns and the lowered price target, Mizuho’s Outperform rating indicates a belief that Churchill Downs’ stock will perform well relative to the market or its sector in the foreseeable future. The company maintains a P/E ratio of 17.92x and has demonstrated strong profitability with a gross margin of 34.32%.
In other recent news, Churchill Downs Incorporated announced a $500 million share repurchase program, replacing a previous authorization with $125.6 million remaining. This initiative underscores the company’s confidence in its financial stability and commitment to shareholder value. Meanwhile, Stifel analysts adjusted their outlook on Churchill Downs, lowering the price target from $161 to $142 while maintaining a Buy rating, citing adverse weather conditions affecting Q1 earnings estimates. Barclays (LON:BARC) initiated coverage with an Overweight rating and a $125 price target, highlighting the company’s robust growth pipeline and strategic market position. JMP analysts maintained a Market Outperform rating with a $157 target, emphasizing Churchill Downs’ strategic gaming industry position and improving leverage. Additionally, Churchill Downs extended its partnership with Ford through 2029, securing exclusive automotive sponsorship rights for the Kentucky Derby, which includes new fan experiences and branding initiatives.
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