Published on: December 20, 2024, 03:55h.
Last updated on: December 20, 2024, 03:55h.
The iconic Kentucky Derby event hosted by Churchill Downs (NASDAQ: CHDN) is often referred to as “the run for the roses.” However, a different rose, The Rose Gaming Resort, could potentially enhance the company’s investment prospects.
The newly opened Rose casino hotel in Dumfries, Va. has shown promising signs in its early stages. Despite some initial challenges, Stifel analyst Jeffrey Stantial remains positive and reiterated a “buy” rating with a $164 price target, suggesting a 24% upside potential.
The property has attracted players from various locations, including Manassas, Woodbridge, Fredericksburg, and Washington, DC, where CHDN competes against MGM’s National Harbor,” stated the analyst.
Churchill Downs’ properties in Kentucky and Virginia are expected to be key growth drivers, with The Rose showing early indications of being a significant catalyst for the company’s stock.
The Rose’s Potential Performance
With a portfolio of horseracing venues in Virginia, Churchill Downs is projected to generate significant monthly gross gaming revenue (GGR). Analysts believe The Rose could exceed these estimates, potentially achieving a GGR run rate of $15 million to $20 million monthly.
Stantial mentioned that the operator’s current marketing investments and operational adjustments could lead to improved margins, with The Rose possibly reaching EBITDA margins of 50% in the future.
Furthermore, The Rose benefits from a strategic geographic location that minimizes direct competition. Stantial highlighted Virginia’s lower gaming taxes and limited competing properties, suggesting that The Rose might outperform nearby venues, including MGM’s National Harbor.
Overall, The Rose Gaming Resort presents a promising opportunity for Churchill Downs to capitalize on Virginia’s expanding gaming industry and drive future growth.