Published on: November 4, 2025, 11:37 AM.
Updated on: November 4, 2025, 11:37 AM.
- Jefferies lowers stock rating for struggling company
- Analyst expresses low confidence in growth of physical casinos
- Caesars may need to seek additional funding
After facing ongoing challenges, shares of Caesars Entertainment (NASDAQ: CZR) took another hit on Tuesday when a sell-side analyst revised the stock rating downward.
In a recent communication to clients, Jefferies analyst David Katz downgraded his rating on the gaming giant from “buy” to “hold,” citing disappointing third-quarter performances and the ongoing underperformance of physical casino earnings.
“We do not take the downgrade for CZR lightly, especially with shares down 40% this year, yet our outlook for recovery has diminished. Earnings in brick-and-mortar gaming have yet to stabilize,” remarks Katz. “Expectations for digital gaming growth have also waned, delaying significant value appreciation.”
Katz reduced his price target for Caesars from $39 to $22, suggesting a potential upside of about 10% based on current stock valuations.
Caesars Faces Possible Capital Needs
With a staggering $11.9 billion in debt and subpar credit ratings, Caesars may soon have to consider raising capital. Should this be necessary, they would likely face high interest rates given their elevated debt and compromised credit standing.
Katz indicated that “confidence is low” in Caesars achieving noteworthy earnings before interest, taxes, depreciation, and amortization (EBITDA) this year and in 2026, estimating modest increases of merely 1.8% and 2.2%, respectively. Although property renovations could potentially enhance earnings, this would necessitate a significant cash outlay from Caesars.
The company might also encounter further expenses if it can eventually agree on terms with VICI Properties (NYSE: VICI) regarding the regional casino master lease, a point that has raised concerns among shareholders in both firms.
“It is likely a resolution to the elevated rent in the VICI regional master lease will involve capital expenditure from CZR. Ultimately, the situation may deteriorate just as much as it might improve, requiring external intervention,” Katz concluded.
Caesars’ Digital Future Remains Uncertain
This year, there has been speculation regarding Caesars potentially spinning off its digital division, which includes Caesars Sportsbook, aiming to create value for shareholders. Company executives have expressed that the current share prices do not reflect the successes achieved in the online sector.
Though there was optimism that Caesars Digital could yield substantial returns through a spin-off, this belief has been undermined by expectations of lower-than-anticipated EBITDA in the coming year and what Katz refers to as “elusive” structural hold.
“Digital gaming growth forecasts have deteriorated, pushing meaningful value generation further on the horizon,” the analyst concluded.