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Investing.com - Wells Fargo (NYSE:WFC) upgraded Monarch Casino & Resort (NASDAQ:MCRI) from Underweight to Equal Weight on Thursday, while raising its price target to $89.00 from $83.00.
The upgrade reflects Monarch’s consistent performance beats, including second-quarter EBITDA results that exceeded consensus expectations by 16%, driven by market share gains in Black Hawk and effective expense control. The company maintains impressive gross profit margins of 66.5% and has delivered a solid 11.5% return year-to-date.
Wells Fargo cited Monarch’s "reasonable valuation" at 7.3x 2026 estimated EV/EBITDA compared to its five-year average of approximately 7.5x, along with the company’s strong free cash flow profile that enables increased capital returns and potential M&A or expansion opportunities.
The investment bank raised its fiscal year 2025-2027 EBITDA estimates by 5-6%, noting Monarch has demonstrated its ability to sustain and grow EBITDA margins even in a flat gross gaming revenue environment.
Wells Fargo now projects sustained 35% adjusted EBITDA margins for fiscal years 2025-2027 and expects Monarch’s free cash flow position to strengthen as capital expenditures decline from an estimated $50 million in 2025 to approximately $43 million in 2026 and 2027.
In other recent news, Monarch Casino & Resort, Inc. reported impressive second-quarter earnings and revenue results, significantly surpassing analyst expectations. The company achieved adjusted earnings per share of $1.44, exceeding the forecasted $1.19 by $0.25. Revenue reached $136.91 million, beating the consensus estimate of $129.75 million, marking a 6.8% year-over-year increase. The primary driver of this strong performance was a 12.1% increase in casino revenue compared to the previous year. Monarch’s adjusted EBITDA rose by 16.8% year-over-year to $51.3 million, with a margin expansion of approximately 320 basis points to 37.5%. CEO John Farahi attributed these results to advancements in technology and operational efficiencies. Additionally, the company completed a $100 million redesign and upgrade of hotel rooms at its Atlantis (WA:ATSP) property, contributing to market share growth in Reno. Monarch also reported continued market share growth at its Monarch Black Hawk property, especially among mid-to-upper-tier guests from the Denver and Boulder metro areas.
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