Caesars Stock Offers Attractive Risk/Reward, Says Analyst

Following a dreadful showing last year, Caesars Entertainment (NASDAQ: CZR) stock has rebounded modestly to start 2025, receiving ample help from Wall Street analysts extoling the shares’ finer points.

Stifel’s Steven Wieczynski is part of that group, telling clients in a new note that the risk/reward in the gaming stock skews to the upside and that the shares are attractively valued. He acknowledges that those traits may be enough for some investors to nibble at Caesars amid fears that comparisons on the Las Vegas Strip where the company is the second-largest operator will be tough to meet this year and as market participants fret about the health of the consumer.

However, we believe the setup for 2025 is overly attractive and believe the risk/reward at current trading levels is too compelling to pass up, thus we believe investors should be revisiting the CZR story,” observes the analyst. “2025 consensus estimates are set in a manageable/beatable position (and any kind of beat should be good enough right now).”

He rates Caesars a “buy” with a $51 price target, down from $54, implying upside of almost 50% from today’s closing price.

Caesars Stock Has Upside Levers

In the early innings of 2025, at least one clear theme is emerging from the sell side as it relates to Caesars stock: there’s a growing chorus of analysts speculating that this could be the year that the operator engages in a transaction involving its digital unit to unlock value for investors.

“We also believe certain CZR shareholders could start to ‘push’ management to try and unlock value for their Digital platform,” adds Wiecyznski. “Based on where shares are trading today, we believe any type of ‘event’ could drive a material amount of value back to existing CZR shareholders.”

The analyst acknowledged that at the moment, there’s not clarity as to how Caesars could part with the online unit, but if it does a tax-free spinoff at 13x to 15x earnings before interest, taxes, depreciation, and amortization (EBITDA), that could value the unit at $17 to $23 a share. Spinning off the digital segment in that fashion would require Caesars to retain at least 20%.

Regional Casinos Potential Concern for Caesars Stock

Among some analysts, there’s a school of thought that the issue of tough comparisons on the Las Vegas Strip is baked into Caesars stock price and that the worst of those comps pertain to the highest end casino hotels, implying Caesars could be somewhat insulated from that trend due to its heavier focus on mass market customers.

If there is a risk to the stock in 2025, it could come in the form of lethargy at the operator’s regional casinos, though management believes there will be growth in that segment this year.

“We remain more concerned about regional gaming markets, but believe our revised estimates are properly accounting for a lackluster operating environment,” concludes Wieczynski.