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On Thursday, Stifel analysts adjusted their outlook on Churchill Downs stock (NASDAQ:CHDN), currently trading at $105.90, lowering the price target from $161.00 to $142.00. Despite this change, they maintained a Buy rating on the shares. The revision comes as the company prepares to announce its Q1 earnings on April 23. According to InvestingPro data, two analysts have recently revised their earnings expectations downward for the upcoming period.
The reduction in the price target reflects an alignment with the latest monthly state data, which prompted a 4% decrease in the expected Q1 Adjusted EBITDA for Churchill Downs. This adjustment is attributed to the adverse weather conditions that have recently impacted operations. Despite these challenges, the company maintains a GOOD financial health score according to InvestingPro, with strong revenue growth of 11.07% over the last twelve months. Stifel analysts had previously expressed optimism for the company's performance heading into the summer, particularly with the development of 'The Rose' and the historical seasonal uptick associated with the Kentucky Derby.
However, the analysts noted that tariff-related uncertainty could pose challenges, especially as Churchill Downs is about to embark on a significant $880-920 million expansion of the Churchill Downs Racetrack (CDRT). Despite these concerns and the volatile market environment, Stifel's analysts believe in the merits of owning high-quality assets. They underscored the unique growth and value creation opportunities that Churchill Downs presents, which underpin their continued positive stance on the stock. For deeper insights into Churchill Downs' valuation and growth prospects, investors can access comprehensive analysis through InvestingPro's detailed research reports, which include over 30 key financial metrics and expert recommendations.
The firm also revised its FY25 Adjusted EBITDA estimate slightly downward by 1% due to the impact of the Q1 weather conditions. The new target price of $142 takes into account these lower estimates and a recalibrated Gaming/HRM multiple. Based on current analyst consensus, the stock maintains a Strong Buy rating, with price targets ranging from $142 to $172. The analysts concluded their commentary by reiterating their Buy rating on Churchill Downs shares.
In other recent news, Churchill Downs Incorporated reported record net revenue and adjusted EBITDA for the fourth quarter and full year of 2024. The company's earnings per share matched analyst expectations at $0.92, while revenue slightly exceeded forecasts, coming in at $624.2 million against a projected $620.3 million. Meanwhile, Churchill Downs has announced a $500 million share repurchase program, replacing the previous authorization from September 2021. This move reflects the company's confidence in its financial stability and commitment to enhancing shareholder value.
Additionally, Stifel analysts have adjusted their outlook on Churchill Downs, reducing the price target to $161 from $164 but maintaining a Buy rating. The adjustment follows a slower-than-expected growth in gross gaming revenue from 'The Rose' and Virginia Satellite operations. Truist Securities also revised its price target for Churchill Downs to $162 from $165 while keeping a Buy rating, citing potential growth from multi-year Kentucky Derby projects. These projects are anticipated to double the Derby's EBITDA, indicating strong future prospects.
Furthermore, Ford has renewed its partnership with Churchill Downs, securing its role as the exclusive automotive partner of the Kentucky Derby through 2029. This partnership includes naming rights and various sponsorships, reinforcing the connection between two iconic American brands. These developments highlight Churchill Downs' strategic initiatives and partnerships aimed at driving long-term growth and shareholder value.
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