Wall Street Bets: An Overview of Recent Analyst Insights on the Gambling Sector
In the latest updates from Wall Street Bets, analysts have provided insights into the gambling industry, particularly focusing on the performance of the Las Vegas Strip and notable companies within the sector.
Las Vegas Strip Experiences Moderate Room Rate Increase
J.P. Morgan analyst Joseph Greff reported a modest rise in room rates along the Las Vegas Strip in a note dated February 28. He highlighted that revenue per available room in Las Vegas reached $177 for the month, marking a 6.1% increase compared to the previous year. The average daily room rate for the Strip also saw a 2% year-over-year rise, while occupancy rates improved by 330 basis points over the same period. Greff noted a decrease in room inventory, which stood at 150,325, reflecting a 3.7% decline year-over-year and a slight 0.2% drop from the previous month. Additionally, the number of occupied room nights remained unchanged year-over-year. Citywide occupancy was reported at 81.9%, an increase of 300 basis points compared to last year, with weekend occupancy reaching 83.6%, significantly higher than the midweek rate of 77%. Year-over-year comparisons showed a 200 basis point rise for weekends and a 320 basis point increase for midweek stays. Furthermore, January saw a 2.7% uptick in average daily auto traffic across major highways, with a 3.1% increase on the I-15 at the Nevada-California border, while total air passenger numbers rose by 0.3% year-over-year.
Golden Entertainment’s Mixed Financial Results
Analyst David Katz of Jefferies provided an assessment of Golden Entertainment’s performance in a statement released on February 27. He described the company’s report as mixed, noting that its top-line figures were lower than expected while bottom-line results were in line with forecasts, suggesting a neutral impact on stock performance. Katz conveyed some optimism based on management’s assertion of earning stability in 2025, though he cautioned that the ongoing pursuit of capital growth may limit potential upward movement in share value. He indicated that while there might be positive developments in 2025, these remain uncertain. Barry Jonas from Truist Securities also evaluated Golden Entertainment on the same day, pointing out that the Q4 EBITDA met expectations and was slightly above market estimates. He mentioned that factors such as the election and a lighter Formula 1 event adversely affected occupancy and average daily room rates in Las Vegas, although performance in December and January showed improvement. Jonas expressed confidence in the company’s recovery trajectory for the Strat in 2025 and noted a positive trend for taverns and local businesses in Nevada. However, he adjusted the 2025 EBITDA forecast down by 2%, primarily due to the Super Bowl comparison in Q1, while maintaining a price target of $36 and a “Buy” rating based on favorable valuation metrics.
Penn Entertainment Displays Resilience Amidst Competition
In his analysis of Penn Entertainment’s quarterly performance, Jefferies’ Katz remarked that the results reflected a strong core retail business, despite ongoing competitive challenges that are expected to persist into 2025. He pointed out that growth initiatives are likely to contribute additional value in the long run. However, Katz expressed concerns regarding the uncertainty surrounding the digital segment’s market share and operational performance, which remains a significant factor in shaping his cautious outlook on the company’s prospects. He reiterated a “Hold” rating for the stock.
Nevada and Las Vegas Q1 Performance Insights
On February 27, J.P. Morgan’s Greff examined the fourth-quarter results for Nevada, noting that gross gaming revenue for the Las Vegas Strip amounted to $840 million in January, reflecting a substantial 22.4% increase year-over-year. In contrast, revenue from local Las Vegas markets dropped slightly by 1.2% to $281.9 million, while overall statewide gaming revenue, which includes the Strip and other areas like Reno and Tahoe, rose by 12.5% year-over-year, totaling $1.44 billion. Greff highlighted that the table game hold on the Strip was 18.9%, an increase from 14.8% in the prior year, with baccarat hold jumping to 26.7% from 16.4%. Other metrics showed a 15% year-over-year increase in table games drop, an 11% rise in slot drop, and a 2% increase in locals’ slot drop. Truist Securities analyst Jonas also commented on the performance in Las Vegas, noting a 22% year-over-year rise in Strip gaming win, driven by exceptional baccarat results, which surged 121% year-over-year, and a 46% increase in table win. Despite a slight 1% decline in January visitation compared to the previous year, the Strip experienced a 6% increase in revenue. Local market performance was softer, with a 1% decline, likely due to less favorable slot accounting. Overall, 2025 is beginning on a promising note for the Strip, witnessing its strongest growth rate in 13 months, although a softer outlook for February is anticipated.
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