Red Rock Resorts stock rating upgraded by Truist Securities on local market strength

Investing.com - Truist Securities upgraded Red Rock Resorts (NASDAQ:RRR) from Hold to Buy on Wednesday, while significantly raising its price target to $67.00 from $45.00. The casino operator, which boasts impressive gross profit margins of 66.6% and has delivered a robust 22.6% return year-to-date, appears undervalued according to InvestingPro Fair Value analysis.

The upgrade comes despite Red Rock Resorts shares already posting meaningful year-to-date gains, with Truist Securities indicating further upside potential remains.

Truist cited the Las Vegas locals market as "very well positioned" amid favorable population trends, with Red Rock benefiting more than expected from what the firm described as a "continued flight to quality."

The research firm, drawing on its analysts’ experience as former Vegas local residents, noted that Red Rock Resorts holds "some of the best in class properties" in the market.

Truist also highlighted the recently passed No Tax On Tips law as a potential tailwind for the industry, with operators suggesting it could generate an $80M-$85M inflow of discretionary income across the Las Vegas market.

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 projected $0.48. The company’s net revenue was $497.9 million, slightly below the forecast of $499.25 million. JPMorgan initiated coverage on Red Rock Resorts with an overweight rating, citing potential growth from the company’s capital expenditure projects and a favorable Las Vegas locals gaming market. Mizuho (NYSE:MFG) upgraded Red Rock Resorts’ stock rating to outperform, reflecting optimism about the company’s prospects and the potential benefits from legislative changes impacting the Las Vegas market.

Shareholders of Red Rock Resorts approved board nominees during the recent Annual Meeting, demonstrating strong support for the existing leadership. The advisory vote on executive compensation and the ratification of Ernst & Young LLP as the independent auditor were also passed with significant approval. Citizens JMP analyst Jordan Bender reiterated a Market Outperform rating on Red Rock Resorts, noting that a recent tax bill could boost revenue in the near term. These developments highlight ongoing confidence in Red Rock Resorts’ strategic direction and financial health.

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