Caesars Entertainment (CZR) Reiterated at Market Outperform as 'Story Is Simple From Here'

Citizens analyst Jordan Bender reiterated a Market Outperform rating and $41.00 price target on Caesars Entertainment (NASDAQ: CZR).

The analyst commented. "There is an ongoing debate around the current cash flow in the regional lease, but we would point out that even if those properties are slightly positive to neutral now, the annual escalators will eventually push the portfolio of assets to generate negative cash flow (including capex), incentivizing Caesars to hand back the keys and implying the company would have leverage over VICI Properties (VICI, MO, $35 PT, Germain), in our view. The pressure on the lease could be intensified by increased competition from the New York downstate casinos and New Jersey bringing back talks of a casino in North New Jersey, which the CEO expects to see once the New York casinos are established. Online will continue to be a bright spot into next year, in our view, with EBITDA from its digital business expected to increase to $428M, according to consensus expectations. The marketing agreement with the NFL will end following the Super Bowl, which we estimate will result in ~$50M of cost savings in our model. Overall, we believe the Caesars story is simple from here: it needs to generate FCF, pay down debt, and deleverage the company to get valuation moving in the right direction, which we believe this experienced management team has proven historically it can do following M&A and capex cycles."

For an analyst ratings summary and ratings history on Caesars Entertainment click here. For more ratings news on Caesars Entertainment click here.

Shares of Caesars Entertainment closed at $23.00 yesterday.

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