Golden Entertainment (NASDAQ: GDEN) has caught the attention of Deutsche Bank analysts, earning a “Buy” rating based on anticipated real estate transactions and strategic shifts in 2025. The bank’s analysis suggests significant upside potential for the stock, tied to possible changes in the company’s operational structure.
Real Estate Sales as a Game Changer
Deutsche Bank analyst Carlo Santarelli highlighted that selling real estate assets at current market conditions could provide more than 20% upside for Golden Entertainment’s stock. Their calculations suggest an equity valuation of $40, compared to its current trading range of just above $30. With a price target of $36, the investment case for Golden is increasingly tied to monetising its real estate.
However, the equity and interest rate environments have complicated the feasibility of such transactions. Santarelli noted, “Demand from gaming-oriented REITs in Las Vegas is strong, but prevailing market conditions have made these deals challenging.” If this dynamic shifts in 2025, Golden could be positioned for a transformational real estate sale paired with broader strategic changes.
Operational Structure Under Pressure
Golden Entertainment’s current structure faces scrutiny due to several headwinds, including:
- Limited portfolio growth.
- A shrinking public float.
- High corporate expenses relative to EBITDA.
Santarelli pointed out that without a real estate transaction, other significant changes might be unavoidable in 2025. The Nevada casino segment, for instance, is coming off a difficult year, with a projected double-digit EBITDA decline in 2024.
Stabilising the STRAT in 2025
A critical factor for Golden Entertainment’s 2025 performance will be the stabilisation of its STRAT Hotel, Casino & SkyPod property. Despite challenges like a modest Super Bowl-related revenue dip in the first quarter, there are several reasons for optimism:
- Enhanced marketing campaigns.
- New programming at Atomic Golf.
- Room renovations completed in 2024.
- Improved midweek occupancy rates.
Santarelli remarked, “Signs of stability at STRAT in 2025 could serve as a positive catalyst for shares at current levels.”
Capital Returns Could Boost Shareholder Value
Golden Entertainment’s ability to return capital to shareholders is another key component of Deutsche Bank’s bullish outlook. Santarelli estimates the company could repurchase approximately 9% of its market cap in 2024, with this buyback momentum likely to accelerate in 2025. With limited avenues for growth-focused capital expenditures, buybacks are expected to remain a priority.
- Maintaining net leverage below three times.
- Returning up to $140 million to shareholders in 2025 through repurchases, equivalent to 14% of the current market cap.
Santarelli added, “The capital-return story could be unique for Golden, given its smaller float and the strategic alternative perceptions surrounding the company.”
Deutsche Bank’s Valuation Approach
Deutsche Bank’s $36 price target relies on a sum-of-the-parts (SOTP) valuation. This methodology applies segment-level multiples that align with historical market trends and projected asset sales through 2025 property-level cash flows.
