On Tuesday, Mizuho Securities adjusted its price target on shares of Churchill Downs (NASDAQ:CHDN), a prominent racing, gaming, and online entertainment company, to $151 from the previous target of $157. The firm has maintained its Outperform rating on the stock.
The revision comes as Mizuho recalibrates its financial projections for Churchill Downs, citing specific reasons for the change. The firm has reduced its third-quarter adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) estimates from $253 million to $237 million, against a market consensus of $239 million. For the fourth quarter, estimates have been brought down from $260 million to $243 million, with the Street at $242 million.
Additionally, Mizuho has lowered its forecast for the full year 2025 from $1,326 million to $1,286 million, which is slightly below the Street's expectation of $1,292 million.
The adjustments to the estimates are primarily attributed to delays in The Rose project, which have shifted the completion date from late third quarter to early November due to weather-related setbacks. Furthermore, there has been a noted impact from slightly lower than anticipated monthly gross gaming revenue (GGR) data, which the firm attributes to weather challenges, including hurricanes.
Despite these adjustments, Mizuho continues to express confidence in Churchill Downs by retaining the Outperform rating. The firm's analyst elaborated on the decision, stating, "We maintain our Outperform rating but revise our PT to $151 from $157." The revised price target reflects the new financial projections and the recent developments affecting the company's operations.
In other recent news, Churchill Downs has been in the spotlight with impressive financial performance. The company reported an 8% second-quarter earnings beat, with revenues hitting $591 million, surpassing the $548 million projection by Mizuho Securities. The company's EBITDA stood at $242.5 million, exceeding the firm's estimate of $214 million. Churchill Downs' Live and Historical Racing segment also reported strong revenue of $100.8 million, exceeding both Mizuho's estimate of $86.3 million and the consensus estimate of $89.6 million.
Recent developments include the reaffirmation of a Buy rating on Churchill Downs by Truist Securities, following a site visit to the company's Kentucky properties. BofA Securities upgraded the company's stock rating from Neutral to Buy, citing potential for double-digit EBITDA growth. Similarly, Jefferies maintained a Buy rating on Churchill Downs' shares, raising the price target to $167 following the company's strong quarterly results.
In other company news, Churchill Downs announced the retirement of board member Robert L. Fealy, whose contributions to the company's growth and strategic direction were highly valued. The company's commitment to growth and expansion is evident in its investment in new ventures such as The Rose, which is expected to open in October.
InvestingPro Insights
To complement Mizuho's analysis, recent data from InvestingPro offers additional context on Churchill Downs' financial position. The company's market capitalization stands at $9.95 billion, with a P/E ratio of 24.81, indicating investor confidence in its earnings potential. This aligns with the InvestingPro Tip that Churchill Downs is expected to remain profitable this year.
Churchill Downs has demonstrated strong financial performance, with a revenue growth of 19.35% over the last twelve months as of Q2 2024, reaching $2.62 billion. The company's EBITDA growth of 32.7% during the same period is particularly noteworthy, suggesting improved operational efficiency despite the challenges mentioned in Mizuho's report.
An InvestingPro Tip highlights that Churchill Downs has maintained dividend payments for 50 consecutive years, reflecting the company's commitment to shareholder returns even in challenging times. This consistency could be appealing to investors looking for stable income streams.
For readers interested in a more comprehensive analysis, InvestingPro offers 11 additional tips for Churchill Downs, providing a deeper understanding of the company's financial health and market position.
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