Texas Capital: Boyd Gaming Stock Catalyst-Rich, Undervalued

Like other casino stocks, Boyd Gaming has struggled of late, shedding nearly 10% over the past month — a slump that extends the year-to-date loss to 18.6% — but some analysts remain constructive on shares of the Orleans operator.

Ahead of the regional casino operator’s third-quarter earnings report on Oct. 22, Texas Capital analyst David Bain lowered estimates on Boyd, as he did with several other gaming operators, but he notes that following third-quarter slumps, regional casino equities are displaying “underlying strength with dislocated valuations.”

He rates Boyd a “buy” with a $106 price target, implying potential upside of nearly 53% from today’s closing price of $69.37.

Boyd Specifics

Bain adds that Boyd trades below “historical equity valuation” while highlighting other possible catalysts that could facilitate a rebound by the downtrodden gaming stock. Those include expectations of a fourth-quarter rebound in the Las Vegas locals segment and across the other regions in which Boyd runs gaming venues.

The analyst also pointed to Boyd management’s track record of discipline with an emphasis on generating solid return on investment (ROI) — factors that could position the Gold Coast operator to potentially be a bidder for assets that Caesars Entertainment (NASDAQ: ZR) may divest as it works through the process of being acquired by Fertitta Entertainment Inc. (FEI).

As of yet, Caesars and FEI haven’t put any venues on the market, but it’s widely believed that will happen at some point. Consensus in the investment community indicates that Boyd can afford to be selective with acquisition opportunities and that it’s unlikely to purchase any land-based casinos that don’t include owned real estate.

Boyd Stock May Deserve More Credit

This year, nearly all casino stocks, including Boyd, have been painted with the same negative brush, but some market observers believe that’s an unfair assessment of the Aliante operator, particularly with the company sporting one of the industry’s strongest balance sheets while returning capital to shareholders by way of buybacks and dividends.

For his part, Bain believes Boyd offers an “underappreciated growth pipeline and consistent same-store performance.”

That growth pipeline includes Cadence Crossing in suburban Las Vegas and a regional casino scheduled to open in late 2027 in Norfolk, Va.