On Friday, UBS downgraded Bloomberry Resorts Corporation (BLOOM:PM) (OTC: BLBRF) stock from Buy to Neutral and significantly reduced its price target to PHP7.00 from PHP12.80.
The adjustment follows observations of peaking gaming demand at Solaire Entertainment City (SEC) and higher than expected cannibalization from the ramp-up of Solaire Resorts North (SRN).
The firm cited concerns over the rising promotional allowances and a forecast for increased marketing expenses for SRN, which are expected to impact margins negatively. As a result, UBS has revised its margin expectations for Bloomberry Resorts, making previous estimates unattainable.
In a detailed financial outlook, UBS has decreased its 2025 EBITDA estimate for Bloomberry by 30%, following a 10% cut in revenue and a 700 basis points reduction in margins, now anticipated to be around 30%. Consequently, the firm projects Gross Gaming Revenue (GGR) and EBITDA to grow by 11% and 6% year-over-year, respectively, in the year 2025.
The revised price target of PHP7.00 reflects a 45% decrease from the previous target, aligning with the firm's view that the current stock valuation at 6.5 times the revised 2025 EBITDA estimates is fair when considering historical data. The downgrade to a Neutral rating indicates a more cautious stance on the future performance of Bloomberry Resorts Corporation.
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