Red Rock Resorts Garners Analyst Support Following Post-Earnings Slide

On a strong day for casino stocks, Red Rock Resorts (NASDAQ: RRR) is standing out for the wrong reasons as investors assess a disappointing third-quarter earnings update, but the sell-side is defending the gaming equity.

In late trading, shares of the Sunset Station operator are off 5.2% after the company posted a third-quarter loss of 17 cents a share on revenue of $488.7 million. Analysts expected a per-share profit of 44 cents on sales of $478 million. Spending of $430 million at Durango Casino & Resort in Southwest Las Vegas, which was higher-than-expected, may be weighing on the minds of investors, but the operator expects those expenditures will pay off over the long term.

“Durango North’s budget increases to $430 million from $385 million on expanded scope, with opening targeted for 3Q27,” notes Truist Securities analyst Barry Jonas. “The project adds ~275,000 square feet, nearly 400 slots, gaming/food and beverage and substantial entertainment amenities. Management maintains its targeted 20% return on investment over time.”

Red Rock’s overall 2026 capital spending is now up to $550 million to $575 million.

Red Rock Selloff ‘Doesn’t Make Sense’

Amid signs of sturdiness in the Las Vegas locals market — Red Rock’s core constituency — some members of the sell-side community are defending the stock, describing the slump as perplexing.

While the Las Vegas Strip remains challenged, operators such as Red Rock that focus more on the locals market are investing in property-level enhancements and there are signs those moves are paying dividends.

“We think it should be clear by now that in the LVL market, operators that are aggressively investing in their underlying assets are being rewarded with market share gains,” adds Wieczynski. “We believe RRR is the perfect example of this phenomenon. As they continue to invest in their asset base, they are seeing market share shifts move in their favor.”

He rates Red Rock stock a “buy” with a $70 price target, implying upside of more than 44% from current levels.

Red Rock May Have Tailwinds

New venue developments are often viewed as potential catalysts for Red Rock stock. It’s possible updates on that front could emerge in the months ahead.

“For the next major RRR development project (incl. previously discussed Cactus or Inspirada), management is working through scope/pricing on multiple projects and expects to announce something relatively soon,” adds Jonas. “Management is also studying a potential ~400 room hotel expansion and additional meeting space/spa for Durango following the current Durango North expansion.”

The analyst also points out that Red Rock’s tavern business is flourishing as 60% of those customers previously weren’t members of the operator’s loyalty program, indicating that there are compelling crossover opportunities with the company’s casino hotels.