Date: September 30, 2024, 03:44h.
Last updated on: September 30, 2024, 03:44h.
Churchill Downs (NASDAQ: CHDN) stock could see a boost from the company’s ongoing efforts to enhance its Kentucky racetrack ahead of the Kentucky Derby next year.
Analyst Barry Jonas from Truist Securities is optimistic about the impact of these enhancements and has a positive outlook on the stock, with a $166 price target representing potential upside of 20%. The company plans to invest $80 to $90 million in renovating the grandstand at its Kentucky racetrack, with the improvements expected to be completed before the 2025 Derby.
According to Jonas, there are multiple opportunities for value-enhancing projects at the track due to strong consumer demand and the chance to increase spending per attendee at the Derby.
Churchill aims to enhance its Kentucky track with new amenities to support Derby Week events and races. The company saw record handle for Derby Week and the Derby itself in 2023.
Churchill Downs Stock and the Kentucky Derby
Jonas views the Kentucky Derby as a key asset for Churchill Downs, with ticket sales making up a significant portion of revenue during Derby Week. He believes there is room for further improvement through capital expenditures.
Previous enhancements at the track have been successful, and the Derby remains a highly sought-after event in the US, with demand for premium seating outpacing supply. Churchill expects a return on investment from these developments over time.
Jonas also highlighted the positive performance of Churchill’s TwinSpires, especially with partnerships with DraftKings and FanDuel in the horseracing sector.
In addition to racetracks, Churchill operates regional casinos and historical horse racing facilities. The stock trades at a premium compared to others, reflecting its unique position in the market.
Expansion Plans for Churchill Downs
Despite a slow start at Derby City Gaming, Churchill management remains optimistic, citing successful examples from other properties. The company is set to complete an expansion of its HHR facility in Owensboro, Ky., next year.