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Boyd Gaming Stock Gets Boost Amid Strong Fourth Quarter Projections

Boyd Gaming’s stock price received an optimistic upgrade from J.P. Morgan, as the firm anticipates robust fourth-quarter earnings for the regional gaming giant. The updated price target is now set at $80 for 2025, up from the prior estimate of $74, reflecting stronger-than-expected performance in the company’s key markets.

Regional Gaming Fuels Optimism

J.P. Morgan analyst Joseph Greff highlighted a positive trend for Boyd Gaming’s Midwest and South segment. Gaming revenue in this region showed steady growth throughout 2023, culminating in a projected 5% year-over-year increase in the fourth quarter. This marked improvement comes after a 2% rise in the third quarter and smaller gains earlier in the year.

Breaking down the numbers further:

  • October: Gaming revenue increased by 4.5% year-over-year.
  • November: Revenue surged by 12%.
  • December: Revenue climbed 13%, despite a less favorable calendar with two fewer weekend days.

A standout contributor was Boyd’s Treasure Chest property, where gaming revenue soared by 81% year-over-year during the fourth quarter. Excluding this exceptional performance, same-store gaming revenue still rose modestly by 1%.

Boyd Gaming casino revenue growth 2023

A Mixed Bag for Earnings Outlook

Despite the upbeat projections for regional gaming, some challenges persist. Adverse weather conditions across parts of the U.S. during the fourth quarter are expected to weigh on demand. Additionally, market-wide trends in online sports betting have posed hurdles, including lower-than-expected hold rates.

Greff expects Boyd’s management to address these issues during the company’s earnings report on February 6, balancing the positive momentum with the impact of these external factors.

EBITDA Projections: Adjustments Across Segments

J.P. Morgan revised its earnings before interest, taxes, depreciation, amortisation, and restructuring or rent costs (EBITDAR) estimates across Boyd Gaming’s key segments:

  • Midwest and South: Fourth-quarter EBITDAR is forecasted at $193 million, up from $187 million in the previous estimate.
  • Downtown Las Vegas: Revised to $22 million, down from $27 million.
  • Online segment: Adjusted to $31 million from $41.5 million.
  • Las Vegas locals: Slightly raised to $109 million, from $107 million.

Looking ahead to 2025, J.P. Morgan predicts EBITDAR growth in the Midwest and South segment to $750 million (up from $738 million), while the downtown Las Vegas segment is expected to generate $78 million (down from $85 million). Estimates for the Las Vegas locals and online segments remain mostly unchanged.

2026 Forecast: Slowing Growth Ahead?

For 2026, J.P. Morgan projects Boyd’s total adjusted EBITDAR to reach $1.335 billion, slightly below the consensus estimate of $1.38 billion. This forecast implies only 1% year-over-year growth, with relatively flat margins anticipated. While the near-term outlook appears strong, these longer-term projections suggest that growth may taper off, raising questions about sustainability.

Key Takeaways for Investors

Boyd Gaming’s upward revision in stock price reflects confidence in its regional gaming strength, even as broader challenges like weather disruptions and online betting trends loom. The Midwest and South segment continues to be a cornerstone of Boyd’s financial performance, bolstered by standout properties like Treasure Chest.

Investors will likely keep a close eye on Boyd’s fourth-quarter results and management’s commentary on February 6 for insights into how the company plans to navigate short-term hurdles while sustaining long-term growth.

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