Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Gambling.com prospects
David Bain of Texas Capital Securities on August 15 wrote in a release about Gambling.com that after “a 2%/1% beat to consensus revenue/EBITDA, we lower our CY25E/CY26E EBITDA 6%/12%. Estimate changes are primarily driven by lesser traditional SEO growth assumptions. We lower our price target to $14 from $17 based on reduced estimates. As traditional search landscape growth visibility better materializes, Gambling.com is entering underutilized new channels for SEO growth. Further, Gambling.com continues to diversify revenue through higher growth, albeit smaller, adjacent businesses for fuller platform monetization. At scale, these businesses carry higher margins (and valuations) than Gambling.com’s traditional search business, in our view.”
Bally’s rated Hold
Truist Securities’ Barry Jonas August 14 looked at Bally’s.
“Total Q2 Adjusted EBITDAR (now post-Queen merger), was -3% below our and the Streets model,” wrote Jonas. “Internationally, Bally’s came to an agreement in July to divest its business to Intralot S.A., which would leave Bally’s as a majority shareholder. Management noted that, despite delays, Chicago construction remains on track for a September 2026 opening (though not necessarily completion), with GLPI reimbursing costs beginning Q3. While sentiment around Chicago is mixed, a successful Chicago opening/ramp along with Tropicana optionality could offer upside, we remain Hold rated given elevated leverage and liquidity concerns.”
Penn’s Joliet property promising
Jeffries’ David Katz looked at Penn Entertainment’s new property in Joliet, Illinois.
“The $185 million spend is appropriate, the amenity and food offerings are strong, and the location is a considerable upgrade from the prior riverboat access,” Katz wrote August 13. “Although the risks are inherent in the density of competition in the Chicago area and whether the quality level strikes the right connection with the available customer base, we believe a mid-teens ROI is reasonable longer term.”
GLPI assigned BBB- rating
Fitch Ratings assigned the proposed senior unsecured notes issued by GLP Capital, a subsidiary of Gaming and Leisure Properties, a ‘BBB-‘ rating on August 13.
“Fitch expects GLPI to operate through the cycle with leverage at or below 5.5x, which is appropriate for a ‘BBB-‘ rated U.S. REIT with the company’s asset profile,” read a statement. “The company has historically operated with meaningful headroom relative to this sensitivity, with leverage below 5x over the last three years. Its leverage is supported by lease escalators and balanced external investment activity.
“GLPI’s ratings allow leverage to temporarily exceed 5.5x for larger acquisitions. However, Fitch expects GLPI to return leverage to under 5.5x within 12-18 months after an acquisition through EBITDA growth or by repaying debt with proceeds from equity sales and retained cash flow.”
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