{"id":222026,"date":"2022-07-19T14:30:45","date_gmt":"2022-07-19T19:30:45","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=222026"},"modified":"2022-07-19T14:47:47","modified_gmt":"2022-07-19T19:47:47","slug":"caesars-price-target-cut-as-inflation-recession-fears-set-in","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/caesars-price-target-cut-as-inflation-recession-fears-set-in\/","title":{"rendered":"Caesars Estimates Pared Amid Recession Fears, but Risk\/Reward Seen as Favorable"},"content":{"rendered":"

Shares of Caesars Entertainment (NASDAQ:CZR) are off almost 59% year-to-date, marking one of the worst showings in the gaming space. That’s sparked concerns on Wall Street that the stock is vulnerable to economic contraction and a potential pullback in consumer spending.<\/p>\n

\"Caesars\"
Harrah’s on the Las Vegas Strip. An analyst slashed his price target on Caesars, but still sees upside. (Image: Vegas Means Business<\/em>)<\/figcaption><\/figure>\n

In a note to clients, Stifel analyst Steven Wieczynski slashes his price target on Caesars to $63 from $113, while reiterating a \u201cbuy\u201d rating. He says Caesars is the second-worst performing stock in his coverage this year, a notion that appeared \u201ccrazy\u201d at the start of 2022.<\/p>\n

With fears around the consumer mounting and a balance sheet that many believe is over-levered, CZR shares have taken it on the chin,\u201d<\/strong> writes Wieczynski. \u201cThat\u2019s why we believe the time has come to price a full-blown recession into our estimates.\u201d<\/strong><\/p><\/blockquote>\n

Despite the analyst dramatic price forecast revision, Caesars stock is higher by more than 8% in late trading. It joined a broader Tuesday rally in gaming equities.<\/p>\n

Caesars Risk\/Reward Decent Despite Recession Fears<\/h2>\n

Escalating fears of economic contraction are being stoked this month. That’s as the Federal Reserve continues a scorched-earth campaign of interest rate hikes to quash inflation.<\/p>\n

\n

All of that is seen as a toxic brew for the consumer discretionary sector, which is where gaming stocks reside. As it is, some gaming executives<\/a> say they\u2019re already seeing signs of inflation crimping spending.\u00a0 It\u2019s widely expected more operators will offer commentary on that subject on upcoming second-quarter earnings conference calls.<\/p>\n<\/div>\n

Wieczynski acknowledges that a \u201cdramatic slowdown\u201d in consumer spending and travel<\/a> could arrive as soon as 2023. As such, he\u2019s trimming Caesars 2023-24 property-level earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates by 18%. On the other hand, it\u2019s not all bad news for the Harrah\u2019s operator.<\/p>\n

\u201cSounds terrible, right? Well, even after significantly cutting our out-year estimates, we still see plenty of long-term value, and believe CZR shares have overcorrected,\u201d <\/strong>says the analyst.<\/p>\n

Revisiting Caesars Story<\/h2>\n

Alone, the aforementioned factors of rising interest rates, persistent inflation, and increasing recession jitters are enough to weigh on any consumer cyclical stock. The sector is one of the worst-performing groups this year.<\/p>\n

With $13.5 billion in debt<\/a> at the end of the first quarter \u2014 one of the largest burdens in the gaming industry \u2014 those scenarios are amplified with Caesars. Still, it\u2019s possible that the stock has corrected too dramatically, indicating that investors may want to revisit this story.<\/p>\n

\u201cOur revised $63 price target still shows ~63% upside from current levels. Even after pricing in a full-blown recession, we believe CZR\u2019s core operations are worth ~$42\/share. With shares still trading south of $40\/share, we believe the risk\/reward is too good to pass up at this point,\u201d concludes Wieczynski.<\/p>\n

The analyst adds that Caesars is reining in advertising and promotional spending for its iGaming and online sports wagering unit. He noted that it\u2019s inconceivable that those businesses should sport negative equity value.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Shares of Caesars Entertainment (NASDAQ:CZR) are off almost 59% year-to-date, marking one of the worst showings in the gaming space. That’s sparked concerns on Wall Street that the stock is vulnerable to economic contraction and a potential pullback in consumer spending. In a note to clients, Stifel analyst Steven Wieczynski slashes his price target on […]<\/p>\n","protected":false},"author":46,"featured_media":222029,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[62,10],"tags":[],"acf":[],"yoast_head":"\nCaesars Price Target Cut As Inflation, Recession Fears Set In<\/title>\n<meta name=\"description\" content=\"Caesars price target lowered, but analyst remains bullish on stock.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/caesars-price-target-cut-as-inflation-recession-fears-set-in\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Caesars Price Target Cut As Inflation, Recession Fears Set In\" \/>\n<meta property=\"og:description\" content=\"Caesars price target lowered, but analyst remains bullish on stock.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/caesars-price-target-cut-as-inflation-recession-fears-set-in\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2022-07-19T19:30:45+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-07-19T19:47:47+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/07\/harrahs.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"670\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/caesars-price-target-cut-as-inflation-recession-fears-set-in\/\",\"url\":\"https:\/\/www.casino.org\/news\/caesars-price-target-cut-as-inflation-recession-fears-set-in\/\",\"name\":\"Caesars Price Target Cut As Inflation, Recession Fears Set In\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/caesars-price-target-cut-as-inflation-recession-fears-set-in\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/caesars-price-target-cut-as-inflation-recession-fears-set-in\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/07\/harrahs.jpg\",\"datePublished\":\"2022-07-19T19:30:45+00:00\",\"dateModified\":\"2022-07-19T19:47:47+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Caesars price target lowered, but analyst remains bullish on stock.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/caesars-price-target-cut-as-inflation-recession-fears-set-in\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/caesars-price-target-cut-as-inflation-recession-fears-set-in\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/caesars-price-target-cut-as-inflation-recession-fears-set-in\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/07\/harrahs.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/07\/harrahs.jpg\",\"width\":1200,\"height\":670,\"caption\":\"Harrah's on the Las Vegas Strip. 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