Deutsche Bank: Regional Casino Stocks Offer ‘Attractive Risk/Reward’
Story summary
Regional casino stocks, including Boyd Gaming (NYSE: BYD) and Penn Entertainment (NASDAQ: PENN), have been drubbed in recent months despite fundamentals in the group remaining mostly solid. Some members of the sell-side community believe opportunity is afoot with select regional operators. In a new
📌 Key Highlights & Takeaways
- Regional casino stocks, including Boyd Gaming (NYSE: BYD) and Penn Entertainment (NASDAQ: PENN), have been drubbed in recent months despite fundamentals in the group remaining mostly solid.
- Some members of the sell-side community believe opportunity is afoot with select regional operators.
Regional casino stocks, including Boyd Gaming (NYSE: BYD) and Penn Entertainment (NASDAQ: PENN), have been drubbed in recent months despite fundamentals in the group remaining mostly solid. Some members of the sell-side community believe opportunity is afoot with select regional operators.
In a new report to clients, Deutsche Bank analyst Steven Pizzella upgraded Boyd Gaming (NYSE: BYD) and Penn Entertainment (NASDAQ: PENN), shares of which are off 21.6% and 31.4%, respectively, over the past 90 days, to “buy” from “hold.”
Pizzella lifted his price target on Boyd Gaming to $99 from $98 while boosting his forecast on Penn to $25 from $23, implying significant upside potential for the regional casino stocks, which trade around $70 and $15.80, respectively, at this writing.
In addition to macroeconomic pressures, including elevated inflation, high gas prices and a slack job market, regional casino stocks were confounded by one-off calendar woes, including one fewer Friday in August. However, Pizzella notes venues operated by Boyd and Penn showed signs of life in September and that momentum is carrying over into this month.
Regarding Boyd, the analyst says the Orleans operator’s setup is getting cleaner in the current quarter and into 2027 — bullishness that’s supported by the Suncoast Las Vegas renovation and a strong pipeline of growth projects that could stoke solid return on investment (ROI). Those efforts include “Par-A-Dice, Amelia Belle, Cadence Crossing, Suncoast, and The Orleans, alongside the late 2027 opening of Norfolk.”
Pizzella also praised Boyd’s management for a strong track record of capital allocation and the company’s efforts to return capital to investors.
“BYD’s capital return story remains attractive, in our view, supported by 2.6x net leverage on our year end 2026E, a ~$150 million quarterly share repurchase program (~12% annualized buyback yield), and a modest ~1.1% dividend yield,” says the analyst.
Penn was a regional casino stock darling through the first half of this year, but rapidly lost that status as Treasury yields spiked, confirming the shares are tethered to interest rates . However, that implies that as the Ameristar deleverages, the shares could benefit.
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Source: Casino.org.
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