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On Thursday, Stifel analysts adjusted their outlook on Caesars Entertainment (NASDAQ:CZR), lowering the price target to $51.00 from the previous $54.00 while still maintaining a Buy rating on the stock. Currently trading at $33.76, the company's stock sits well below analyst targets ranging from $35 to $66. The revision follows a period of market uncertainty regarding Caesars Entertainment's shares. Despite generating $3.67 billion in EBITDA over the last twelve months, concerns about the company's leverage and the health of the consumer market have made some investors hesitant to engage with the stock. InvestingPro data reveals the company operates with a debt-to-equity ratio of 6.29, confirming these leverage concerns.
In 2024, Caesars Entertainment's shares underperformed compared to the broader market, with a decline of 29% against a 23% increase in the S&P 500. This underperformance has been attributed to the company's high levels of leverage, lack of growth, tough competition, and skepticism about the long-term efficacy of Caesars' digital strategy.
Stifel analysts believe that the outlook for 2025 is considerably favorable for Caesars Entertainment. They argue that the current risk/reward balance is too compelling for investors to ignore and suggest that it is time to reconsider the narrative surrounding the company. According to InvestingPro's Fair Value analysis, the stock appears slightly undervalued at current levels. Analysts are optimistic that the consensus estimates for 2025 are both manageable and potentially beatable. They anticipate that any positive earnings surprise should be well-received in the current climate of low sentiment.
Furthermore, Stifel sees potential strategies for Caesars Entertainment to improve its financial position. They suggest that the company could explore various avenues, such as an initial public offering, a spinoff, or a combination with a digital platform, to reduce its debt and strengthen its balance sheet.
In summary, despite the recent adjustment in the price target, Stifel maintains a positive stance on Caesars Entertainment's stock, underlining the opportunities for a turnaround in the coming year. The firm's analysts encourage investors to reevaluate the company's prospects, emphasizing the attractive setup for 2025.
In other recent news, Caesars Entertainment has been the focus of several financial developments. JPMorgan analysts have revised the price target for Caesars' stock, lowering it to $57.00 from $58.00, while maintaining an Overweight rating. This decision was influenced by a review of the company's fourth-quarter earnings estimates, particularly those related to the Las Vegas Strip and digital operations.
The financial institution noted a downturn in the fourth-quarter Las Vegas Strip EBITDAR, adjusting the figure to $485 million from the earlier estimate of $499 million. The analysts also halved the Digital EBITDAR estimate to $26 million from $51 million, based on the assumption of a lower-than-anticipated Online Sports Betting hold.
In other recent developments, the company reported its financial performance for the third quarter, noting a slight year-over-year decline in consolidated net revenues and adjusted EBITDA, particularly in its Regional segment. However, the Digital segment saw a substantial 41% increase in net revenues, achieving a record adjusted EBITDA. The company completed a $140 million share buyback in Q3 and remains optimistic about exceeding its $500 million EBITDA target for digital operations.
These are among the recent developments for Caesars Entertainment, as the company continues to navigate a challenging market with a mix of strategic initiatives aimed at fostering growth and stabilizing its financial position.
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