Quarterly earnings show strong trends in the online gambling market, with companies experiencing positive gains. Jefferies Equity Research analyst David Katz highlighted this in a recent investor note, underscoring a common focus on improving execution or refining future directions among operators.
Katz expressed optimism about management teams, particularly at Las Vegas Sands Corp. and Churchill Downs Inc., who openly admit areas for improvement and outline strategies for addressing challenges. These companies’ earnings calls demonstrated confidence in future prospects. Boyd Gaming Corp. and Gaming & Leisure Properties Inc. (GLPI) face less pressure to change, Katz noted.
Katz maintains ‘Buy’ ratings for all four companies. He raised his price target for Sands from $58 to $61 per share and for Churchill Downs from $127 to $131. Currently, Sands shares close at $52.49, and Churchill Downs at $111.25.
Online Gambling Market Insights
The companies benefit from robust demand trends in regions like Macau, Singapore, and other locales. Sands has reported strong project momentum in Singapore, predicting higher room rates. In Macau, performance at The Londoner improved, but Sands aims to enhance customer reinvestment strategies started in April to boost gross gaming revenue.
Churchill Downs exceeded Wall Street expectations, reporting $934.4 million in second-quarter revenue and $450.9 million in cash flow. Analysts anticipated $895 million in revenue and $430.6 million in cash flow. Churchill Downs’ strong live-racing offerings in Kentucky and Virginia, alongside successful historical horse racing machines, contributed to these results. Additionally, the company plans a $500 million share repurchase.
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Churchill Downs sees potential for further gains at the 2026 Kentucky Derby through elevated ticket prices, broadcast rights, betting, sponsorships, and facility enhancements in Louisville.
Steady Growth in Online Gambling Market
Katz’s primary concerns for the year seemed resolved, except for uncertainties about a casino purchase in Salem, New Hampshire. He characterized Boyd’s strategy as ‘singles and doubles while looking for the right pitch.’ The company surpassed his revenue expectation by $85 million, achieving slightly over $1 billion in revenue, with $357.9 million in cash flow.
‘Growth was supported by core customers and improvements in retail play,’ Katz stated. He noted that the proceeds from Boyd’s sale of its five percent FanDuel stake would fund stock repurchases, with $500 million committed over four quarters.
Boyd’s focus on internal investment and shareholder returns aligns with its policy, despite Wall Street’s interest in more mergers and acquisitions. Katz commented, ‘We don’t foresee compelling acquisition targets, so we appreciate Boyd’s current strategy.’
Conversely, GLPI’s earnings and cash flow fell slightly below projections. Katz emphasized the significance of the company’s growth discussions, focusing on expansions with existing tenants and potential loan opportunities in Native America. He anticipated imminent tribal deals.
