On Thursday, Truist Securities has downgraded shares of Bally's Corp (NYSE: BALY) from Buy to Hold, while also increasing the price target to $18.25, up from the previous $16.00. This adjustment follows the announcement that Bally's accepted an amended acquisition proposal from Standard General (SG, Private).
The offer to purchase Bally's Corp stands at $18.25 per share, which Bally's has identified as equating to an enterprise value (EV) of $4.6 billion. This buyout price is notably a 71% premium over the average share price of Bally's over the past 30 days, as measured by volume-weighted average price (VWAP). Additionally, it surpasses the prior price target by 14% and is 22% higher than Standard General's initial bid in March.
According to the terms of the deal, Bally's will continue to be a publicly traded company after the acquisition is completed. It will merge with The Queen Casino & Entertainment, a smaller gaming company that is predominantly owned by Standard General. Shareholders of Bally's will have the option to convert their holdings into shares of the new combined entity, referred to as NewCO.
The analyst has cited the potential duration of the deal's closure, which may take up to a year, as a rationale for the downgrade to a Hold rating.
InvestingPro Insights
With Bally's Corp (NYSE: BALY) in the spotlight due to its amended acquisition proposal by Standard General, investors are keenly observing the company's financial health and market performance. According to recent data, Bally's has a market capitalization of approximately $684.2 million. Despite challenging market conditions, the company has managed a revenue growth of 7.05% over the last twelve months as of Q1 2024, reflecting some resilience in its operations.
However, it's worth noting that Bally's operates with a significant debt burden and is experiencing a quick cash burn, which are critical factors for investors to consider, especially in the context of a potential acquisition. Moreover, the company's stock price is trading near its 52-week high and has demonstrated strong returns over the last month, with an increase of 18.91%. These metrics, coupled with a volatile stock price movement, may influence investor sentiment and decision-making in the short term.
InvestingPro Tips suggest that Bally's management has been aggressively buying back shares, which could be a sign of confidence in the company's value or a strategy to influence the share price. Additionally, with analysts not anticipating profitability this year and a valuation that implies a poor free cash flow yield, the financial outlook requires careful consideration. For those interested in a deeper dive, there are 8 additional InvestingPro Tips available, which can be accessed for Bally's at: https://www.investing.com/pro/BALY. Investors looking to take advantage of these insights can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, offering a comprehensive view of the company's financials and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.