5 Reasons To Buy Boyd Gaming

• Deutsche Bank remains bullish on U.S. regional casino operators headed into 2016.
• The firm sees the recent selloff as a buying opportunity.
• Deutsche Bank has upgraded Boyd Gaming Corporation BYD from Hold to Buy.

This year has been a solid year for U.S. regional casino operators, which have dramatically outperformed their larger international counterparts. In a new report, Deutsche Bank analyst Carlo Santarelli explained why he believes that 2016 will be another strong year for Boyd Gaming and other U.S. regional names.

5 Reasons To Buy

Santarelli believes that consensus 2016 estimates for Boyd leave risk to the upside. Deutsche Bank sees the 15 percent pullback in Boyd’s share price in recent weeks as a buying opportunity, and Santarelli gave five reasons the firm likes the stock:

• 1. A stable recovery in the local Las Vegas market
• 2. Share gains for Boyd in the MW&S/AC/ Peninsula markets
• 3. Sustainable growth at Borgata in the face of weak competition
• 4. The stock is nowhere near its previous highs
• 5. The company is demonstrating “meaningful” free cash flow

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Share Price Disconnect

While share prices of regional operators have sold off in recent weeks, Santarelli has seen no change in the underlying fundamentals of the companies.

“We see the top-line cadence in regional gaming as stable and expect steady 4Q reports with a bias to the upside relative to Consensus outlooks for 2016,” he explained.

Stock Picks

In addition to an upgrade of Boyd to Buy, Deutsche Bank also names Penn National Gaming, Inc PENN as a top buy idea in the space. Deutsche Bank also has a Buy rating on Gaming and Leisure Properties Inc GLPI and a Hold rating on Pinnacle Entertainment, Inc PNK.

Disclosure: The author holds no position in the stocks mentioned.