On Wednesday, Deutsche Bank adjusted its price target for Red Rock Resorts (NASDAQ:RRR), bringing it down from $70.00 to $65.00, while maintaining a Buy rating on the stock. The revision comes after Red Rock Resorts reported first-quarter earnings, which aligned with both Deutsche Bank's forecast and the consensus.
Red Rock Resorts' recent financial performance revealed a softer same-store Local Gross Gaming Revenue (GGR) in the first quarter of 2024. This outcome mirrors the trends seen in the report from Boyd Gaming (NYSE:BYD (SZ:002594)), which showed a 12.5% decline in EBITDA for its Las Vegas local properties. Concerns were raised by investors following the Boyd Gaming results, impacting Red Rock Resorts' share price negatively.
Despite the initial investor reaction, the first-quarter results for Red Rock Resorts were seen as relatively stable. The Las Vegas Locals adjusted EBITDA increased 7% year-over-year. This figure includes an $8.4 million impact from lower sportsbook hold and construction disruption. Excluding these factors, the year-over-year growth would have been 11%. Moreover, the Durango property is anticipated to yield a 20% return on investment on a standalone basis. Adjusting for the aforementioned disruptions, the same-store portfolio is down approximately 9% year-over-year, or about 5% when these items are excluded.
The adjustment of the price target by Deutsche Bank reflects the immediate financial landscape and market reactions to Red Rock Resorts' and Boyd Gaming's recent earnings reports. The maintained Buy rating indicates a continued positive outlook on the stock despite the revised target.
InvestingPro Insights
As Red Rock Resorts navigates the post-earnings landscape, real-time data from InvestingPro offers a deeper dive into the company's financial health and market position. With a market capitalization of $5.72 billion and a Price/Earnings (P/E) ratio of 17.87, Red Rock Resorts demonstrates a solid standing in the market. Additionally, the company's Gross Profit Margin for the last twelve months as of Q4 2023 stands at an impressive 63.67%, reflecting its ability to maintain profitability amidst industry challenges.
Investors considering Red Rock Resorts will find value in two notable InvestingPro Tips: the company's gross profit margins have been identified as impressive, and analysts have revised their earnings upwards for the upcoming period, which may signal confidence in the company's future performance. Moreover, Red Rock Resorts has shown a large price uptick over the last six months, with a 30.95% total return, showcasing its recent market momentum.
For readers interested in a more comprehensive analysis, InvestingPro provides additional tips on Red Rock Resorts, offering insights that could help in making informed investment decisions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and unlock the full potential of InvestingPro's financial expertise.
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