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On Wednesday, Stifel analysts, led by Steven Wieczynski, adjusted the price target for Caesars Entertainment (NASDAQ:CZR) to $42 from the previous $51, while retaining a Buy rating on the stock. Wieczynski’s commentary highlighted concerns about consumer spending and the company’s debt levels, stating, "With fears around the consumer mounting and a balance sheet that remains overlevered, CZR shares remain pressured." InvestingPro data confirms these debt concerns, showing a debt-to-equity ratio of 5.89x and a concerning current ratio of 0.84, indicating short-term obligations exceed liquid assets.
The revision in the price target comes as Stifel incorporates expectations of a moderate recession affecting consumer behavior in the second half of 2025 through 2027. The firm has reduced its property EBITDA estimates by approximately 8%, which now sit around 7% below the consensus for the years 2026 and 2027. According to InvestingPro data, Caesars currently generates $3.63B in EBITDA, with analysts maintaining optimistic forecasts despite recent market pressures. Get access to 8 more exclusive ProTips and comprehensive financial metrics with InvestingPro’s in-depth analysis.
Despite the significant cut in future earnings estimates, Stifel sees enduring value in Caesars Entertainment’s shares. Wieczynski expressed a belief that the current market reaction might be an overcorrection, saying, "Even after significantly cutting our out-year estimates, we still see plenty of long-term value and believe CZR shares have overcorrected."
The analyst remains optimistic about the company’s prospects, citing the potential for free cash flow (FCF) expansion and a management team that views their stock as significantly undervalued, especially when it is trading in the $20 range. The focus on reducing leverage is a key strategy for Caesars Entertainment, and Stifel anticipates positive outcomes from the possible monetization of the company’s digital platform in the future.
In other recent news, Caesars Entertainment reported a mixed financial performance for the first quarter of 2025. The company missed earnings per share (EPS) and revenue forecasts, with an EPS of -$0.54 compared to the expected -$0.17, and revenue of $2.79 billion, slightly below the anticipated $2.82 billion. Despite these misses, the digital segment showed a 19% year-over-year revenue growth, and there is a strong outlook for Las Vegas operations. Citizens JMP reiterated its Market Outperform rating for Caesars, maintaining a $45.00 price target, highlighting the company’s first-quarter performance which exceeded expectations despite low sentiment in the macroeconomic environment. Analysts from Citizens JMP noted the company’s significant reliance on Las Vegas operations, expected to account for 51% of its 2024 EBITDAR, but they still view Caesars as a preferred investment in the Las Vegas Strip. The firm supports Caesars’ current valuation, with shares trading at a discount compared to historical averages. Caesars’ digital segment continues to perform strongly, with net revenue up 19% year-over-year, and the company remains optimistic about its strategic position in the market.
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