Deutsche Bank Raises Red Rock Resorts Price Target

Posted on: January 24, 2024, 12:09h.

Last updated on: January 24, 2024, 12:09h.

Red Rock Resorts (NASDAQ: RRR) remains a top pick among analysts, with one increasing the price target for the casino operator, following recent developments.

Red Rock Resorts
Red Rock Resort in Summerlin, Nevada. An analyst raised his price target on the stock today. (Image: Las Vegas Weekly)

Deutsche Bank analyst Carlo Santarelli boosted his price forecast on Red Rock to $62 from $54, noting the strength in the Las Vegas locals segment and potential upside from the new Durango Casino & Resort. He sees the target implying a 16% upside from Tuesday’s close.

We believe 4Q23 LV locals segment performance is likely to surpass Consensus and drive an adjusted EBITDA beat for RRR. Further, we believe 2024 Consensus forecasts appear achievable, if not beatable, should underlying market fundamentals remain largely firm,” wrote Santarelli in a note to clients today.

The $750 million Durango casino and resort has been open for around seven weeks and is reported to have gotten off to a strong start. Santarelli remains optimistic about the venue’s prospects and sees potential competition with other Las Vegas locals establishments.

Durango Impressing in Early Innings

However, the concerns could be offset by the casino’s location in Southwest Las Vegas, an area experiencing significant population growth but not yet saturated with casinos. Some market observers are worried that the new Durango could take traffic from Red Rock’s eponymous casino hotel in Summerlin, but there is a general consensus that loyal customers will eventually return.

Analysts remain positive on Durango’s performance and the overall LV locals market strength, and are reaffirming their Buy rating, price targets, and estimates

Positive Analyst Ratings and Catalysts Ahead

Red Rock’s stock has seen gains and is set to benefit from potential near-term catalysts, including December gross gaming revenue figures from the Nevada Gaming Control Board (NGCB) and the company’s fourth-quarter earnings report in February 2024. Despite sales misses in 2023, there are factors supporting the stock.

“Our Buy rating is reaffirmed, backed by near-term catalysts such as the 4Q23 earnings report in February 2024, coupled with our belief in the company’s strong organic growth and compelling valuation within the context of current sector valuations,” concluded Santarelli.

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