{"id":248037,"date":"2022-12-14T15:23:50","date_gmt":"2022-12-14T21:23:50","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=248037"},"modified":"2022-12-14T16:49:34","modified_gmt":"2022-12-14T22:49:34","slug":"caesars-penn-downgraded-by-bank-of-america-amid-mounting-risk","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/caesars-penn-downgraded-by-bank-of-america-amid-mounting-risk\/","title":{"rendered":"Caesars, Penn Entertainment Downgraded as BofA Analyst Sees Casino Lethargy"},"content":{"rendered":"

Shares of Caesars Entertainment (NASDAQ: CZR) and Penn Entertainment (NASDAQ: PENN) slipped Wednesday. That’s after Bank of America analyst Shaun Kelley downgraded both gaming equities.<\/p>\n

\"Caesars
Caesars Palace on the Las Vegas Strip. Bank of America downgraded Caesars and Penn Entertainment on Wednesday. (Image: CNN<\/em>)<\/figcaption><\/figure>\n

In a note to clients on Wednesday, Kelley lowered his rating on both casino operators to \u201cneutral\u201d from \u201cbuy,\u201d while trimming his price target on Caesars to $55 and his forecast on Penn to $40. Year-to-date, Caesars is off almost 44%, while Penn shed nearly a third<\/a> of its value.<\/p>\n

The Bank of America analyst notes that regional casino operators could be vulnerable to declining earnings and sales estimates, which haven\u2019t yet arrived in earnest, if consumer spending materially declines next year against the backdrop of a slowing economy.<\/p>\n

Gaming, and especially regionals, are the largest \u2018over-earners\u2019 vs. pre-COVID in our coverage, but unlike other areas in consumer discretionary, estimates have not yet come down, leaving potential risk should the consumer soften,\u201d wrote Kelley.<\/p><\/blockquote>\n

The commentary on regional casinos is pertinent in the cases of Penn and Caesars, because the former is the largest operator of such venues, while the latter has an extensive regional portfolio of its own.<\/p>\n

For Penn, Barstool Enthusiasm Waning<\/h2>\n

Regarding Penn Entertainment, Kelley indicates the stock could be at risk of a momentum unwind as investor enthusiasm for the operator\u2019s ownership of Barstool Sportsbook wanes.<\/p>\n

\u201c2023 is likely about refocusing & re-accelerating growth via Barstool\u2019s media integration, the launch of its in-house technology stack, and minding a stable\/cash-generative core business, albeit one with slow growth and meaningful operating leverage,\u201d said Kelley.<\/p>\n

\n

In August, Penn announced it would take full control of Barstool Sports<\/a> after paying $163 million in January 2020 to acquire 36% of the sports media property. The deal was previously heralded as one of the more potent intersections of media and sports wagering. But as Kelley notes, some investors are concerned about Barstool Sportsbook\u2019s low market share.<\/p>\n<\/div>\n

Last week, Penn approved a new $750 million<\/a> share repurchase program, signaling that management sees value in the shares. However, some analysts and investors are fretting about the company\u2019s spending plans, including sizable expenditures in Illinois and the doubling in size of the M Resort in Henderson, Nev.<\/p>\n

Caesars Consistency Could Take Awhile<\/h2>\n

Regarding Caesars, which is the second-largest operator on the Las Vegas Strip, consistent investor returns could take some time to accrue, according to Kelley.<\/p>\n

Rising interest rates and rent, and a weak asset sale market have slowed deleveraging, and we believe it could take 3+ years to reach leverage levels that make consistent shareholder returns possible,\u201d he opined. \u201cGiven competition, it\u2019s unlikely we see online reach its margin potential in the next 1-2 years.\u201d<\/p><\/blockquote>\n

On the asset sale front, \u00a0it was widely expected entering 2022 that the operator would shed one of its Strip venues in an effort to raise cash, but the plug was recently pulled<\/a> on that plan.<\/p>\n","protected":false},"excerpt":{"rendered":"

Shares of Caesars Entertainment (NASDAQ: CZR) and Penn Entertainment (NASDAQ: PENN) slipped Wednesday. That’s after Bank of America analyst Shaun Kelley downgraded both gaming equities. In a note to clients on Wednesday, Kelley lowered his rating on both casino operators to \u201cneutral\u201d from \u201cbuy,\u201d while trimming his price target on Caesars to $55 and his […]<\/p>\n","protected":false},"author":46,"featured_media":248038,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[62,10],"tags":[81897,81903],"acf":[],"yoast_head":"\nCaesars, Penn Downgraded By Bank of America Amid Mounting Risk<\/title>\n<meta name=\"description\" content=\"Caesars, Penn hit with downgrades, lower price targets by Bank of America.\" \/>\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-penn-downgraded-by-bank-of-america-amid-mounting-risk\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Caesars, Penn Downgraded By Bank of America Amid Mounting Risk\" \/>\n<meta property=\"og:description\" content=\"Caesars, Penn hit with downgrades, lower price targets by Bank of America.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/caesars-penn-downgraded-by-bank-of-america-amid-mounting-risk\/\" \/>\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=\"2022-12-14T21:23:50+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-14T22:49:34+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/12\/CP-1-scaled.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"2560\" \/>\n\t<meta property=\"og:image:height\" content=\"1707\" \/>\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=\"2 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-penn-downgraded-by-bank-of-america-amid-mounting-risk\/\",\"url\":\"https:\/\/www.casino.org\/news\/caesars-penn-downgraded-by-bank-of-america-amid-mounting-risk\/\",\"name\":\"Caesars, Penn Downgraded By Bank of America Amid Mounting Risk\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/caesars-penn-downgraded-by-bank-of-america-amid-mounting-risk\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/caesars-penn-downgraded-by-bank-of-america-amid-mounting-risk\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/12\/CP-1-scaled.jpg\",\"datePublished\":\"2022-12-14T21:23:50+00:00\",\"dateModified\":\"2022-12-14T22:49:34+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Caesars, Penn hit with downgrades, lower price targets by Bank of America.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/caesars-penn-downgraded-by-bank-of-america-amid-mounting-risk\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/caesars-penn-downgraded-by-bank-of-america-amid-mounting-risk\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/caesars-penn-downgraded-by-bank-of-america-amid-mounting-risk\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/12\/CP-1-scaled.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/12\/CP-1-scaled.jpg\",\"width\":2560,\"height\":1707,\"caption\":\"Caesars Palace Las Vegas. 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