Churchill Downs ‘Irreplaceable Assets’ Driving EBITDA Growth, Says BofA Analyst

Churchill Downs (NASDAQ:CHDN) is setting up to be one of 2021’s more compelling names in the gaming space, according to one analyst.

Scenes from the 2020 Kentucky Derby. An analyst is bullish on Churchill Downs. (Image: Getty Images)

In new coverage of the racetrack operator’s stock, Bank of America (BofA) analyst Finn Barrett today rates Churchill a “buy” with a $235 price target. On the first trading day of the new year, CHDN stock is following most of its gaming peers and the broader market lower on concerns stemming from a spike in coronavirus cases and jitters among market participants regarding the outcomes of two Senate runoff elections in Georgia tomorrow.

Those could prove to be temporary headwinds, as the BetAmerica operator is poised to deliver stellar earnings before interest, taxes, depreciation and amortization (EBITDA) growth over the next several years.

We expect CHDN to grow EBITDA by +50 percent in 2022 relative to 2019, the best in the gaming industry. This may even prove conservative, with our upside case closer to +90 percent,” said Barrett in note to clients.

His price forecast of $235, which is the highest among sell-side analysts, implies upside of 20.5 percent from the Dec. 31 close, and is well above the Wall Street consensus of $199.33. Churchill’s 52-week high is $212.60, which was set just last month.

Enviable Asset Mix

Churchill’s BetAmerica brand trails some of the more recognizable brands in the booming US online sports betting arena. But the operator is making moves to increase market share and is positioning itself to capitalize on iGaming growth, too.

Between BetAmerica, the Twin Spires horse betting app, and its eponymous racetrack in its home state of Kentucky, Churchill Downs has “unique/irreplaceable assets that provide a strong moat,” notes Barrett, the BofA analyst. “Moat” is financial lingo to describe a company’s competitive advantages. A firm with a strong or wide moat, such as Churchill, can fend off competitors for up to two decades.

According to Morningstar, moats are derived from five sources: Switching costs, the network effect, intangible assets, cost advantages, and efficient scale.

“Intangible assets are things such as patents, government licenses, and brand identity that keep competitors at bay,” says the research firm.

With online casino and sports betting licenses in multiple states, and ownership of the Kentucky Derby, Churchill Downs checks the intangible assets box.

Decent Balance Sheet

Entering 2021, Churchill’s balance sheet is fair among regional gaming competitors. It has long-term debt of $2.16 billion and cash on hand of $622 million. It’s positive on a net operating cash flow basis, something that is not true of some of its rivals.

Most of the analysts covering CHDN stock are bullish or very bullish on the name, and the average price target on the shares increased 7.55 percent over the final two months of 2020.

Todd Shriber

Gaming Financials, Casino Business----Todd Shriber got his start in financial markets as a reporter with Bloomberg News. Later, he became a trader at a Southern California-based long/short hedge fund, where he specialized in trading sector and international ETFs leading up to and during the financial crisis. Currently, he analyzes, researches, and writes on ETFs for a variety of Web-based publications and financial services firms. Shriber has been quoted in Barron's,, and The Wall Street Journal. His work has been published on sites such as Benzinga, ETF Daily News, ETF Trends, MarketWatch, Fox Business, and He joined the news writing team in 2019, and lives in Southern California, where he enjoys golf and taking his black lab to the dog park. When in Las Vegas, he likes to wager on college football, the NBA, three-card poker, and roulette, even though he knows better. Email:

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  • Churchill Downs debt has doubled no fans allowed at the racetrack, we are in a pandemic with possibly Joe Biden as president with his awful tax laws. Many of its businesses are held with in Illinois which is broke so most likely will be be the first state to raise taxes on gambling. Only an absolute fool would buy this company right now!... this is just my opinion you could look up the facts yourself. PS don't forget about the c.o.o. selling over $1000000 in stock

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