Stifel Starts Red Rock Resorts (RRR) at Buy

Stifel initiated coverage on Red Rock Resorts (NASDAQ: RRR) with a Buy rating and a price target of $25.00.

Stifel analyst, Steven Wieczynski cited: (1) The LVL market appears poised to outgrow its regional operator peer group over the next three to five years, in our view; (2) Management’s post-2011 track record demonstrates an ability to create shareholder value; (3) Native American contracts infuse a source of high-margin growth; and (4) Significant landholdings present long-term growth optionality

The price target is $25 using a FY17 sum-of-the-parts analysis, which includes the pending Palms acquisition. Key assumptions include the application of a 9.0x multiple on LVL EBITDA; a 9.5x multiple on Native American EBITDA; and net debt of $2.16B. The analyst values RRR’s land holdings at $500K per acre, which amounts to $2 of incremental equity value. The roughly 25% upside from current levels warrants a Buy rating.

For an analyst ratings summary and ratings history on Red Rock Resorts click here. For more ratings news on Red Rock Resorts click here.

Shares of Red Rock Resorts closed at $19.32 yesterday.

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