Analysts Divided on Caesars Entertainment as Ratings Diverge

Stock analysts have differing opinions on the future trajectory of Caesars Entertainment, making it a focal point for market discussions. JMP Securities started its coverage on January 9, giving an “outperform” rating and setting a $65.00 price target on the stock. This positive assessment suggests a potential upside of 40.54% from the current price. In contrast, JPMorgan Chase & Co. lowered their price target to $54.00, implying a more conservative 19.87% upside.

Caesars’ quarterly earnings data released on October 31, 2023, exceeded consensus estimates, with the company reporting $0.34 earnings per share, higher than the expected $0.27, and revenue of $2.99 billion, exceeding analysts’ expectations of $2.94 billion.

In terms of insider activity, Director Michael E. Pegram purchased 15,000 shares at an average price of $41.90, reflecting confidence in the company as Pegram now holds 136,697 shares valued at approximately $5,727,604.30.

Several large institutional investors also made adjustments to their positions in Caesars. Soros Capital Management increased its stake by 0.4%, while Czech National Bank and Creative Planning raised their positions by 0.8% and 2.6%, respectively, indicating a mix of confidence and caution among institutional players.

However, both JPMorgan Chase & Co. and Morgan Stanley lowered their price targets for Caesars, with Morgan Stanley reducing it from $48 to $45, indicating a modest downside. Of the 16 analysts covering Caesars, 12 rated it as a “strong buy” or “buy,” while four rated it as “hold.” The consensus price target of $61.94 implied a potential upside of 36.55%, but some analysts highlighted the possibility of downward revisions.

In addition, Barclays analyst Brandt Montour favored Penn National Gaming (PENN) and Caesars Entertainment as top gaming picks for 2024, citing Penn’s success with ESPN Bet and Caesars’ underappreciated deleveraging and robust free cash flow.

Analyst Shaun Kelley from Bank of America projected that Caesars Entertainment may divest two of its Indiana properties, Horseshoe Indianapolis and Harrah’s Hoosier Park, to reduce financial liabilities. The potential sale, estimated to raise nearly $2 billion in net proceeds, could involve VICI Properties as the buyer, aligning with Caesars’ focus on reducing leverage and achieving targeted financial ratios.