Roth Capital Partners analyst Edward Engel delivered a Regional Gaming industry report on Monday where he reiterated Buy ratings on five stocks and a Hold on one.
Offering up key themes for the year ahead, Engel began with the narrative around upcoming fourth quarter 2022 results, which he said will feature the impact had upon casino operators by December’s storms. Prior to the disruptions, gaming stocks were poised for solid Q4 beats but the weather is likely to halt that trend, Engel said.
At the same time, the industry should experience about a two to three per cent gross gaming revenue (GGR) uptick over 2023, the analyst projected, with notable markets in the US Midwest seeing the effect of new casino openings and expansions.
Also on the bright side, Engel pointed to underlying GGR strength in 2022 amid inflationary and recessionary pressures, something he said has not been recognized by investors.
“Gaming stocks feel trapped under the narrative that a recession is inevitable, and while gaming trends have been remarkably resilient, investors continue to expect lower revenue at some point in 2023 as a recession takes hold. Yet as we detailed in our report Lessons from Europe, we believe the industry can withstand mild-to-moderate recessionary pressures,” Engel wrote.
Engel said the gaming stocks that performed better in 2022 were those with lower leverage and more fixed debt, a trend which he sees as likely to continue into 2023.
Below are Engel’s calls on six Gaming industry stocks, in alphabetical order, and with all projected returns listed as per the report’s January 9 publication date.
Stock: Century Casinos (Century Casinos Stock Quote, Charts, News, Analysts, Financials NASDAQ:CNTY)
Roth Capital rating: Buy
Roth Target Price: $11.00
Projected 12-month return: 49 per cent
Stock: Everi Holdings (Everi Holdings Stock Quote, Charts, News, Analysts, Financials NYSE:EVRI)
Roth Capital rating: Buy
Roth Target Price: $23.00
Projected 12-month return: 54 per cent
Stock: Full House Resorts (Full House Resorts Stock Quote, Charts, News, Analysts, Financials NASDAQ:FLL)
Roth Capital rating: Buy
Roth Target Price: $10.00
Projected 12-month return: 30 per cent
Stock: Golden Entertainment (Golden Entertainment Stock Quote, Charts, News, Analysts, Financials NASDAQ:GDEN)
Roth Capital rating: Buy
Roth Target Price: $52.00
Projected 12-month return: 37 per cent
Stock: Penn Entertainment (Penn Entertainment Stock Quote, Charts, News, Analysts, Financials NASDAQ:PENN)
Roth Capital rating: Neutral
Roth Target Price: $33.00
Projected 12-month return: nine per cent
Stock: PlayAGS (PlayAGS Stock Quote, Charts, News, Analysts, Financials NYSE:AGS)
Roth Capital rating: Buy
Roth Target Price: $10.00
Projected 12-month return: 96 per cent
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