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On Wednesday, Stifel analysts stood by their optimistic outlook for Caesars Entertainment (NASDAQ:CZR), maintaining a Buy rating and a $51.00 price target on the company’s shares. According to InvestingPro data, analyst targets range from $33 to $66, with the stock currently trading at $35.24. The analysts addressed the concerns contributing to the stock’s stagnant performance, noting factors such as leverage issues, challenging comparisons from previous success, and worries about the consumer environment and broader economic conditions. InvestingPro analysis suggests the stock is currently undervalued.
The Stifel team acknowledged the difficulties in surpassing previous achievements in both Las Vegas and regional markets but expressed confidence in growth potential for the current year. With annual revenue of $11.27 billion and an EBITDA of $3.67 billion, the company maintains significant market presence. Despite modeling a slight downturn for the sake of caution, they anticipate that demand and forward bookings will support growth in these markets. InvestingPro subscribers can access additional insights through comprehensive Pro Research Reports, which provide deep-dive analysis of 1,400+ top stocks.
The analysts also highlighted Caesars’ increasing free cash flow and pointed to the management’s belief that the stock is significantly undervalued, especially when trading in the $30s. Stifel’s revised estimates take into account a restrained consumer spending environment and do not forecast year-over-year EBITDA growth in either Vegas or regional markets. This conservative approach, they argue, positions Caesars for potential outperformance throughout 2025. InvestingPro Tips highlight that the stock has experienced significant volatility recently, with a -8.16% return over the past week.
A key factor for Caesars, according to Stifel, is the reduction of leverage. InvestingPro data shows a debt-to-equity ratio of 6.29, confirming the significant debt burden. The analysts remain positive about the company’s prospects for monetizing its digital platform, although they anticipate that this will require time to come to fruition. The overall message from Stifel suggests a compelling risk/reward scenario for Caesars Entertainment at its current share price levels, with a market capitalization of $7.48 billion.
In other recent news, Caesars Entertainment has reported mixed financial results, with earnings per share (EPS) of $0.05 for the fourth quarter of 2024, exceeding analyst expectations of $0.01. However, the company’s revenue fell short, reporting $2.8 billion against a forecast of $2.89 billion. Despite these challenges, Caesars’ digital segment showed promising growth, with a 20% increase in net revenue year-over-year. Analyst firms have weighed in on these developments, with TD Cowen maintaining a Buy rating and a $48 price target, citing potential value creation from a possible digital spin-off. Meanwhile, CFRA upgraded Caesars from Sell to Hold, raising the price target to $39, based on expectations of steady trading and efforts to reduce debt. JMP also maintained a Market Outperform rating with a $53 target, noting mixed results but highlighting optimism for Caesars’ Las Vegas operations in 2025. Caesars continues to explore strategic options for its digital segment, which could enhance shareholder value.
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