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On Monday, Truist Securities expressed continued confidence in Churchill Downs (NASDAQ:CHDN), maintaining a Buy rating and a $150.00 price target for the company’s stock. This affirmation follows the latest Kentucky Derby, which, despite adverse weather conditions, saw a new victor, Sovereignty, emerge triumphant. The prestigious event set new records in betting for both the Derby race and the entire Derby Week, as well as for the Twinspires platform. With the stock currently trading at $91.08, significantly below its 52-week high of $150.21, InvestingPro analysis suggests the stock is currently undervalued, aligning with Truist’s bullish stance.
The company has anticipated that the EBITDA for the 151st Derby will be $2 million to $4 million less than the previous year. This downturn is largely attributed to the inclement weather experienced during the event. Truist Securities acknowledged these figures, contrasting them with prior projections that suggested a flat year-over-year performance. Despite this temporary setback, Churchill Downs maintains strong financial health with a total EBITDA of $903.8 million over the last twelve months. For deeper insights into Churchill Downs’ financial metrics and growth potential, InvestingPro subscribers can access the comprehensive Pro Research Report, available for over 1,400 US stocks.
Churchill Downs faced several obstacles this year, including difficult year-over-year comparisons and broader economic issues. However, Truist Securities believes that the company is well-positioned for future growth. Factors contributing to this optimistic outlook include potential pricing adjustments, the undertaking of smaller projects, and the upcoming renewal of the NBC contract. Supporting this positive outlook, InvestingPro data reveals the company achieved 11.75% revenue growth in the last twelve months and maintains a perfect Piotroski Score of 9, indicating strong financial health.
The analyst from Truist Securities commented on the Derby’s performance and its implications for Churchill Downs, stating, "Despite the rainy weather Sovereignty raced to the finish to win by more than a length, capping off another record-setting Derby week for CHDN. The event generated record handle/wagering for the Derby race, Derby Week and Twinspires platform."
Looking ahead, Truist Securities sees a "strong setup for growth next year and well beyond." The firm reiterated its Buy rating, emphasizing the enduring resilience and immeasurable value of the Kentucky Derby as key factors in Churchill Downs’ sustained success.
In other recent news, Churchill Downs Incorporated reported its first-quarter 2025 earnings, revealing a miss on both earnings per share (EPS) and revenue forecasts. The company posted an EPS of $1.02, falling short of the forecasted $1.11, and revenue came in at $642.6 million, below the expected $649.69 million. Despite record wagering numbers for the Kentucky Derby Day program and Derby Week, the company anticipates a lower Adjusted EBITDA for Derby Week compared to the previous year. BofA Securities maintained a Buy rating on the stock, expressing optimism for future profitability driven by a new NBC television deal and planned capital projects. Meanwhile, Citizens JMP analysts kept a Market Outperform rating with a $144.00 price target, noting the Kentucky Derby’s reduced share of annual EBITDA due to growth in other business areas. Mizuho (NYSE:MFG) Securities adjusted its price target for the company to $137.00, maintaining an Outperform rating, despite mixed earnings results. Stifel analysts also maintained a Buy rating, with a consistent price target of $142.00, highlighting the company’s strategic postponement of a major capital project due to macroeconomic uncertainties.
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