Churchill Downs Analyst Sized Up 'High-Quality Kentucky Derby Asset': Project Pipeline Includes Casinos

Renowned for owning the Churchill Downs racetrack and hosting the iconic Kentucky Derby annually, Churchill Downs Inc CHDN also boasts an impressive portfolio of other horse racing and casino assets.

Here's an analyst's take on the company's potential.

The Churchill Downs Analyst: Stifel analyst Jeffrey Stantial has initiated Churchill Downs with a Buy rating and a price target of $148.

The Analyst Takeaways: Churchill Downs could be one of the best growth stories in the gaming space, according to Stantial.

“We see growing investor appreciation for CHDN’s high-quality Kentucky Derby asset, with potential flight to quality tailwinds amidst an uncertain outlook for the consumer,” Stantial said.

The analyst said Churchill Downs has a “best-in-class pipeline of high ROI expansion projects.”

With the horse racing segment seeing secular headwinds, Stantial thinks that online sports betting operators could look to expand their offerings with partnerships with Churchill Downs.

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Stantial calls Churchill Downs the market leader in live, historical and online horse racing. “Valuation sits ahead of peers, though warranted, in our view, given CHDN’s unique growth drivers and portfolio of assets.”

For Churchill Downs, the company operates with the three segments of live & historical racing, TwinSpires and gaming. Operations include the ownership of the Kentucky Derby and 11 regional casinos in 10 states.

The analyst sees an opportunity in the company’s pipeline of new and updated projects. The pipeline includes 10 projects that are underway or in the planning stages. The company also has the option for several other projects in Kentucky and Virginia, including a 50% interest in a casino in Virginia.

Churchill Downs has a strong market share position in online horse racing with its TwinSpires segment. The company partnered with DraftKings Inc DKNG for its DK Horse platform. DraftKings now offers betting on horse racing, including the Kentucky Derby.

“Having everything that people want is of critical importance. Our goal is to have things others don’t have,” DraftKings CEO Jason Robins told Benzinga.

Robins added that DraftKings adding horse racing is one of many ways to retain users.

“They won’t see any reason to go elsewhere, unless if we don’t have something they want. We’re not forcing our customers to go elsewhere,” he said.

CHDN Price Action: Churchill Downs shares trade at $114.61 versus a 52-week trading range of $90.93 to $150.45.

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