Golden Entertainment Downgraded as M&A Catalysts Wane

• Analyst says Golden unlikely to engage in near-term mergers and acquisitions
• Strat weakness could weigh on second-quarter earnings

Shares of Golden Entertainment (NASDAQ: GDEN) slid Wednesday after an analyst downgraded the stock, citing softness at the Strat and declining likelihood of near-term mergers and acquisitions.

In a new report to clients, Truist Securities analyst Barry Jonas lowered his rating on Golden to “hold” from “buy” while trimming his price target on the stock to $34 from $36. The new price objective implies potential upside of 12.7% from where the shares reside at this writing. Jonas noted earnings before interest, taxes, depreciation, and amortization (EBITDA) at the Strat — the operator’s marquee Las Vegas casino — could disappoint.

We take Q2 EBITDA estimates down -5% on Strat weakness (now -4% below the Street). We had expected 2025 to see an inflection to some EBITDA growth Y/Y, but now expect a -4% contraction for the year (lowering our 2025E EBITDA by -4%, which is -2% below the Street.),” observes Jonas. “Our new PT of $34 (vs. prior $36) based on ~7x our 2026E EV/EBITDA.”

Before the Truist downgrade, Golden had been in rally mode, jumping 11.56% over the past month and nearly 20% over the previous 90 days.

Golden Unlikely to Get M&A Boost Anytime Soon

For months, one of the oft-cited catalysts for owning Golden Entertainment stock has been the possibility of a value-creating transaction, either in the form of selling an individual casino or monetizing its real estate holdings.

“We have often cited M&A optionality as a backstop for GDEN, but don’t see anything there imminent. The M&A acquisition pipeline doesn’t appear deep for GDEN in the current environment, while the interest rate environment doesn’t seem to support material upside in a sale environment,” adds Jonas. “GDEN has noted its real estate valuation could fall in the 12.5x-15x range, and we think any offers would fall in the lower end today given where interest rates sit today. This likely doesn’t yield a meaningful premium to current valuation.”

In terms of property value, The Strat is the crown jewel in the Golden portfolio. Located near the Las Vegas Strip, that venue could fetch a significant percentage of the operator’s market capitalization in a potential sale. Should such a deal come to pass, it would likely be in sale-leaseback form.

Golden Faces Slight Pub Problems

Golden is the largest operator of gaming taverns in the Las Vegas Valley. Those venues, which include PT’s Pubs, among other brands, feature gaming machines, bar food, and are popular among locals. Jonas notes Golden-operated pubs have been prudent on the promotional front, but the venues probably won’t pick up the slack created by the Strat’s weakness.

While GDEN does have a meaningful Locals market exposure we don’t expect it to offset the Strip softness, which may have a more profound impact on the Strat given its lower-end customer base and well-known weakness,” notes the analyst.

Las Vegas-area gaming taverns could see spending and visitation retrenchment owing to Nevada’s 5.5% unemployment rate, which is the highest in the nation.