Caesars Entertainment (CZR) PT Lowered to $27 at Susquehanna

Susquehanna analyst Joseph Stauff lowered the price target on Caesars Entertainment (NASDAQ: CZR) to $27.00 (from $32.00) while maintaining a Negative rating.

The analyst commented, "CZR is down (27%) since our 7/20 initiation, or ~3x the SPX decline of (9.5%) and ~5x its best comp MGM’s decline of (5%). While CZR management continues to focus investors on continued LV strength (at BofA conference and other investor meetings), we continue to think 2023 estimates are ~7% too high (especially LV). The strong LV trends from the summer seem unsustainable to us, especially after recent concerns for "destination leisure" (weaker 4Q outlook for cruise lines from CCL; airline booking data that indicated September pricing did not strengthen vs. early in the quarter, which is typical, while 4Q demand looks normal vs. 4Q19, but it's early with ~20% of inventory sold). CZR's high leverage (both operating and financial) magnifies the stock's vulnerability to the downside especially with: 1) no sale of LV asset likely; 2) no refi window available; 3) rent going up ~$125m+ on 11/1; and 4) significant regional project capex that comes into "service" in 2H22, which we think is both too late and creates margin concern for CZR's regional segment (AC $0.4B, Lake Charles $0.2B, and IN/FL). We reiterate our Negative rating and lower our price target to $27 (from $32)."

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