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On Tuesday, Truist Securities revised its price target for Boyd Gaming (NYSE:BYD) shares, reducing it to $85.00 from the previous $92.00, while retaining a Buy rating on the stock. Currently trading at $65.83, the stock remains below both Truist’s target and the broader analyst range of $74-$100. According to InvestingPro data, the company maintains impressive gross profit margins of 61.86% despite recent market challenges. The adjustment follows a reported decline in visitation and gaming revenue on the Las Vegas Strip.
Barry Jonas, an analyst at Truist Securities, noted that February’s Gross Gaming Revenue (GGR) on the Strip saw a 14% year-over-year decrease, which he attributed to a challenging comparison with the previous year when the Super Bowl was hosted in Las Vegas. Despite these headwinds, InvestingPro analysis shows Boyd Gaming maintaining strong financial health with a 5.13% revenue growth over the last twelve months. The decline in GGR was further impacted by significant drops in Baccarat (52%), Table games (27%), and one fewer day in the month compared to the previous year.
Despite the downturn in these areas, Jonas pointed out that the casino win excluding Baccarat was only down 3% year-over-year, and the performance of local casinos remained steady. Additionally, February saw a 12% year-over-year decrease in visitation, with significant reductions in Strip Revenue per Available Room (RevPAR) and Average Daily Rate (ADR), which fell 29% and 26%, respectively.
Jonas expressed that while a softer February was anticipated, the underlying trends in Las Vegas remain largely positive for the time being. He anticipates improvements in March. Trading at a P/E ratio of 10.67 and currently appearing undervalued according to InvestingPro Fair Value analysis, Boyd Gaming maintains a solid financial foundation with an overall "GOOD" health score. Considering the quarter-to-date trends, Truist has slightly lowered its first quarter EBITDA estimate for Boyd Gaming by 3%, along with adjusting the price target to reflect the lower market multiples.
In other recent news, Boyd Group Services Inc. reported a 1.7% year-over-year increase in Q4 2024 sales, reaching $752.3 million, although adjusted EBITDA decreased by 11.5% to $83.4 million. The company is undergoing a significant transformation with Project 360, aiming for $100 million in annual cost savings. Boyd Group Services added 155 new locations in 2024 and plans to open 28 more in 2025. Annual sales for the year rose by 4.2% to $3.1 billion, while net earnings dropped to $24.5 million from $86.7 million the previous year. The company aims to achieve $5 billion in revenue by 2029 and double its adjusted EBITDA. Analysts at ATB Capital and RBC Capital Markets have shown interest in Boyd’s cost-saving initiatives and acquisition strategy. Despite facing challenges from economic uncertainty and weather conditions affecting repairable claims, Boyd Group Services remains focused on expansion and strategic initiatives.
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