Why KeyBanc Is Bullish On These 4 Casino Stocks

A KeyBanc analyst has initiated coverage on seven companies in the sports betting and casino space, offering a more conservative view of the total addressable market size opportunity.

4 Gaming Picks: KeyBanc analyst Brett Andress named four stocks in the gaming space that he said are attractively priced: 

1. The most long-term upside potential in the space belongs to Caesars Entertainment CZR, said Andress. The analyst has an Overweight rating and $89 price target. The margin story and solid position in online sports betting were cited as reasons for the bullish stance.

2. Bally’s Corp BALY: Overweight rating, $65 price target. “We see an undervalued land-based portfolio with online sports betting/iGaming upside potential,” the analyst said. 

3. “[A] quality management team, trophy assets and pipeline of investments” are reasons for an Overweight rating and price target of $239 for Churchill Downs, Inc. CHDN, Andress said. 

4. A unique risk-reward play is Boyd Gaming Corporation BYD, the analyst said. 

The company has a favorable regional casino mix and also has a stake in the online sports betting company FanDuel, he said.

Andress has an Overweight rating on Boyd Gaming with a $58 price target.

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KeyBanc's Takeaways On Gaming: The total addressable market for sports betting and iGaming is $13.5 billion in 2025, Andress said.

“This enthusiasm has created a circular reference of bullish sentiment and ever-increasing TAMs,” the analyst said.

KeyBanc has one of the lowest total addressable market size estimates from analysts.

The analyst favors regional casinos with limited exposure to the Las Vegas market.

The other three casinos the analyst intiated coverage on were MGM Resorts MGM, Penn National Gaming, Inc. PENN and Red Rock Resorts Inc. RRR.