On Friday, Boyd Gaming Corporation (NYSE:BYD (SZ:002594)) saw its stock rating upgraded by Jefferies from Hold to Buy, with the price target being raised significantly to $92 from the previous $73. The upgrade reflects a positive outlook for the company's growth potential in the coming year. According to InvestingPro analysis, Boyd Gaming currently appears undervalued, with a GOOD overall financial health score. The company has demonstrated impressive performance with a 33.8% price return over the past six months.
David Katz of Jefferies highlighted several factors contributing to the optimistic perspective. He noted that Boyd Gaming's capital investment in its regional portfolio, along with easing competitive pressures in Las Vegas, are expected to serve as catalysts for the company in the current year. The Las Vegas market has been particularly competitive, and the anticipated easing of this environment is seen as a positive development for Boyd Gaming.
Furthermore, Katz pointed out Boyd Gaming's commitment to share repurchases, with an estimation of $700 million in buybacks for the year 2025. This strategic move is anticipated to contribute to a year-over-year earnings per share (EPS) growth of approximately 9%.
In addition to these points, Katz also mentioned the undervalued aspect of Boyd Gaming's digital presence, particularly through its association with FanDuel. Jefferies values this digital aspect at $7, based on their estimates as of November 2024, and believes it has not been fully appreciated by the market.
The analyst's commentary underscores the potential for Boyd Gaming to leverage its investments and market strategies to enhance shareholder value and secure a stronger position in the gaming and hospitality industry. The raised price target and stock rating upgrade reflect Jefferies' confidence in the company's ability to achieve these goals.
In other recent news, Boyd Gaming Corporation has bolstered its share repurchase program with an additional $500 million, taking the total available repurchase authority to around $843 million. The company's management has been persistently assertive with share buybacks, maintaining a remarkable gross profit margin of 62%. In addition to this, Boyd Gaming declared a quarterly cash dividend of $0.17 per share, demonstrating a 6.25% dividend growth over the last twelve months.
In their recent third-quarter earnings call, Boyd Gaming reported a strong financial performance, with property-level margins exceeding 39%. The company also highlighted significant progress on various expansion plans, including the Sky River Expansion, Cadence Crossing Casino (EPA:CASP), and a new casino in Norfolk, Virginia. As part of its commitment to growth and shareholder returns, Boyd Gaming repurchased $202 million in stock and plans to maintain a leverage ratio of 2.5 times.
These developments suggest Boyd Gaming's disciplined approach to growth, despite a slight decrease in EBITDAR margins from 50% to 49% compared to the previous year. The company's diversification strategies, such as recent acquisitions and a partnership with FanDuel in the online segment, are yielding positive results.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.