Monarch Casino Downgraded Due to Potential Impact of Regional Casino Issues on Boyd Gaming

Monarch Casino and Boyd Gaming Downgraded over Regional Gaming Concerns

Monarch Casino and Boyd Gaming Downgraded amid Regional Gaming Concerns

Posted on: January 5, 2024, 04:11h.

Last updated on: January 5, 2024, 04:11h.

Boyd Gaming (NYSE: BYD) and Monarch Casino & Resort (NASDAQ: MCRI) were downgraded amid concerns that regional casinos are facing consumer-related lethargy.

Monarch stock
Monarch Casino’s Atlantis Reno. The stock and Boyd Gaming were downgraded amid concerns of softness in regional gaming markets. (Image: The Nevada Independent)

In a note to clients, Stifel analyst Steven Wieczynski lowered his ratings on both stocks to “hold” from “buy,” citing uninspiring regional gaming fundamental outlook.

Regarding Boyd, Wieczynski noted revenue growth could be affected by slack visitation trends in regional markets.

“Based on trends to-date, we believe softness in spending will remain most impactful for lower income players in certain markets within the South & Midwest — both regions where BYD has meaningful exposure,” observed the analyst.

Waiting on Deals with Monarch Casino

Monarch Casino & Resort is the smallest US-listed casino stock. The operator runs Atlantis in Reno, Nevada, and its namesake venue in the Black Hawk, Colo. market.

In Reno, Monarch has been dealing with elevated promotional activity by rivals over the past several quarters, which could continue due to changing player behavior.

As for mergers and acquisitions, Monarch is often part of gaming industry speculation on that front. However, it could be awhile before the company officially announces a purchase.

Churchill Downs Top Regional Casino Idea

Stifel is bullish on Churchill Downs (NASDAQ: CHDN), naming it the top idea in the regional gaming space. The research firm maintained a “buy” rating on the stock while boosting its price target to $150 from $145.

Churchill Downs owns all the real estate on which its gaming venues reside and enjoys favorable regulatory benefits in Kentucky and Virginia.

“Putting it all together, we see CHDN as uniquely positioned amidst potentially muted regional operator fundamentals given a pipeline of high-return on investment new casino projects, same-store growth tailwinds in key historical horse racing markets, a favorable outlook for the high-quality Kentucky Derby asset, relative resilience to margin pressures, rapidly improving balance sheet strength & full real estate ownership, and a top-tier management team boasting a disciplined track record of capital allocation,” concluded Wieczynski.

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