Penn, Red Rock Among Casino Stocks Favored by JPMorgan
Posted on: June 23, 2025, 02:56h.
Last updated on: June 23, 2025, 03:08h.
- Analyst Daniel Politzer starts coverage on batch of casino stocks and others
- Sees smaller ESPN Bet losses, new projects helping Penn shares
Penn Entertainment (NASDAQ: PENN) and Red Rock Resorts (NASDAQ: RRR) are among the casino stocks drawing accolades in new coverage by JPMorgan analyst Daniel Politzer.
In a report to clients out Monday, the analyst initiated coverage of 19 gaming and leisure equities, including casino and hotel operators, tagging Caesars Entertainment (NASDAQ: CZR), Penn, and Red Rock as his top casino stock ideas. He rates each of those names “overweight.”
Regarding Penn, which has been under siege this year amid a proxy war initiated by hedge fund HG Vora, the analyst sees declining losses at ESPN Bet and the operator’s $1 billion worth of enhancements at regional casinos as potential catalysts for the stock.
Shares of Penn are down 14% year to date, indicating the operator could get favorable prices on its $325 million share repurchase program, which if executed to the fullest extent, could trim the company’s shares outstanding count by 14%. The buyback plan was also mentioned as a potential catalyst by Politzer.
Red Rock Could Be Casino Stock Winner, Too
Shares of Red Rock Resorts are up nearly 12% year to date, good for one of the better showings among casino stocks, and one that easily trounces the 2025 returns of the various small-cap gauges in which the stock resides.
The operator’s emphasis on the Las Vegas locals demographic is proving beneficial at a time when the “gaming sector is rife with risks” and as macroeconomic volatility is taking a toll on Las Vegas Strip casino hotels, according to Politzer.
We believe the Las Vegas Strip’s experiential appeal (which requires operators to spend substantial/ongoing capex) provides insulation from these supply pressures, but it’s hard not to recognize that the (likely permanent) re-rating of land-based gaming operators these past few years largely reflects market saturation,” observes the analyst.
There’s been more stability at regional casinos than gaming venues in destination markets, and Red Rock’s core customer base has yet to show material signs of scaling back spending despite a challenging broader economic climate. That resiliency is something to note as is the point that the stock is modestly undervalued relative to its peer group.
“To state the obvious, the current economic environment is marked by elevated uncertainty, with the combination of tariffs, interest rate policy, and fallout from geopolitical tensions casting clouds over a rather resilient US consumer,” adds Politzer.
Caesars an Attractive Casino Stock, Too
Stability at regional casinos coupled with the operator’s potential to generate $3 billion in cash flow, about 50% of its current market capitalization, through the end of 2027, are among the supporting factors for shares of Caesars, says Politzer.
The analyst praised the company for being “the sole omnichannel operator to build a profitable digital business.” He added the stock also trades at a slight discount.
Constructive commentary around Caesars’ digital unit is meaningful because management has noted the share price doesn’t reflect strides made in that business, and there’s speculation the operator could look to divest that unit as a way of boosting shareholder value.
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