Tuesday, Mizuho initiated coverage on Boyd Gaming Corporation (NYSE:BYD (SZ:002594)) with a Buy rating and a price target of $80.00.
"BYD is an owner/operator of land-based casinos, with a growing opportunity in Digital (e.g., iGaming)," said the analysts in the note.
The Buy rating is supported by three main arguments, according to the firm. The first pillar is the potential for growth and development opportunities that are not yet factored into the current estimates. Boyd Gaming is seen as having untapped potential that could drive its financial performance in the future.
The second pillar is the attractive valuation of the company. Mizuho pointed out that Boyd Gaming's valuation is supportive, with approximately an 8% free cash flow yield based on their 2024 estimates. Furthermore, the firm noted that Boyd Gaming's 5% stake in FanDuel is underappreciated by the market.
The third pillar is the favorable risk/reward ratio that Boyd Gaming presents. Mizuho suggested that there is compelling downside support for the stock at around $51 per share, indicating a roughly 3:1 risk/reward scenario for investors. This assessment suggests confidence in the stock's stability and potential for upside.
InvestingPro Insights
As Boyd Gaming Corporation (NYSE:BYD) garners a Buy rating from Mizuho with a robust price target of $80.00, a glance at the InvestingPro data and tips offers a deeper dive into the company's financial health and market performance. The current market capitalization stands at a substantial $6.06 billion, with a P/E ratio of 10.37, indicating investor confidence in the company's earnings capacity. Adjusted figures from the last twelve months as of Q4 2023 show a slightly lower P/E ratio at 8.78, which may further support Mizuho's attractive valuation argument.
InvestingPro Tips highlight Boyd Gaming's impressive gross profit margins at 63.82%, which could be a testament to the company's operational efficiency and potential for profitability. Additionally, analysts predict that Boyd Gaming will be profitable this year, aligning with Mizuho's positive outlook. While the stock's price movements have been noted as volatile, a strong return over the last five years suggests a resilient long-term growth trajectory.
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