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Stifel has maintained its Hold rating and $81.00 price target on Monarch Casino & Resort (NASDAQ:MCRI) following virtual investor meetings with the company’s Co-Chairman and CEO John Farahi.
The investment firm noted that while macroeconomic visibility remains limited, Monarch’s management reported stable demand trends. The casino operator highlighted favorable population and job growth fundamentals, stable competitive supply, and high-end positioning as factors supporting its performance relative to broader regional gaming revenue. This positioning has helped maintain impressive gross profit margins of 66.5% and a solid return on equity of 14%.
Stifel pointed to Monarch’s recently completed Atlantis (WA:ATSP) room renovations and ongoing VIP guest sourcing initiatives at its Black Hawk property as additional growth drivers. The firm believes further stock outperformance may require execution on Monarch’s longstanding merger and acquisition aspirations.
Management expressed strict discipline for potential gaming asset acquisitions while showing openness to adjacent hospitality businesses, according to Stifel. Absent M&A activity, Monarch expects to continue returning capital to shareholders given its strong free cash flow and net cash positive balance sheet.
Stifel remains attracted to Monarch’s quality assets, clean balance sheet, full real estate ownership, and ongoing capital returns, but sees the stock’s valuation as potentially range-bound without acquisitions. The firm made no changes to its financial model or price target.
In other recent news, Monarch Casino & Resort reported first-quarter results that surpassed analyst expectations, with revenue increasing by 3.1% year-over-year to $125.4 million, exceeding the anticipated $123.1 million. The company also posted adjusted earnings per share of $1.05, beating the consensus forecast of $0.99. Net income rose by 8.7% to $19.9 million, while adjusted EBITDA increased by 6.7% to $41.1 million. Additionally, Monarch Casino (EPA:CASP) declared a quarterly cash dividend of $0.30 per share, payable on June 15.
In another development, Stifel analysts adjusted their outlook on Monarch Casino, reducing the price target from $90 to $81 but maintaining a Hold rating. This adjustment reflects concerns over macroeconomic factors and one-time litigation expenses despite the company’s strong financial performance. The analysts noted Monarch’s gains in gross gaming revenue and labor efficiencies but mentioned disruptions from hotel renovations as a challenge.
At the company’s recent Annual Meeting of Stockholders, Monarch announced the election of Bob Farahi and Yvette E. Landau as directors, with significant support from shareholders. The meeting also saw the approval of executive compensation, reflecting strong shareholder backing for the company’s leadership. Monarch’s robust balance sheet, with $75.1 million in cash and no borrowings, positions it well for future investments and potential mergers and acquisitions.
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