iGaming Industry's Compelling & Unappreciated Growth Prospects Help Boyd Gaming Win Analyst Attention

  • Credit Suisse analyst Benjamin Chaiken initiated coverage on Boyd Gaming Corp BYD with an Outperform rating and a price target of $82.
  • The re-rating reflected the iGaming industry's robust and unappreciated growth, driving upside to estimates and compelling valuation.
  • The analyst thinks the Downtown market could inflect higher as corporate demand on the Strip returns, driving spillover into adjacent markets like Downtown Las Vegas. 
  • In addition to Downtown market-wide growth, BYD is investing $50 million in its Freemont property, which should drive a healthy ROI. 
  • BYD is spending $100 million to move its Treasure Chest casino from a riverboat to a newly developed land-based asset adjacent to the existing property. The analyst thinks new amenities, better access, and a more cohesive casino floor could drive a 20-30% ROI, with the Pala Interactive acquisition should be a slight tailwind in '23. 
  • In mid-'23, BYD will move its Stardust B2C iGaming product from FanDuel onto the newly acquired Pala Interactive, thus capturing 100% of the economics, serving as an incremental tailwind.
  • BYD's Tribal management contract for the Sky River Casino will likely drive incremental management fees.
  • Price Action: BYD shares traded higher by 1.40% at $59.24 on the last check Tuesday.
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