Bally’s Races to New High as Analyst Jonas Forecasts Massive Upside

Posted on: February 24, 2021, 12:57h. 

Last updated on: February 25, 2021, 07:45h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Bally’s Corp. (NYSE:BALY) is on pace for its highest close on record after a sell-side analyst called the gaming company an undervalued play on sports wagering expansion.

In a note to clients Wednesday, Truist analyst Barry Jonas reiterated a “buy” rating on Bally’s while boosting his price target to $80. That implies upside of more than 19 percent from $67, which is almost the all-time high reached earlier today.

While BALY’s shares are up +106 percent since it announced its Sinclair transaction on 11/18/20 (vs. S&P 500 up +9 percent), we believe shares are still undervalued,” said Jonas.

Last November, the Rhode Island-based casino operator said it’s paying $85 million over 10 years to add its name to 21 regional sports networks (RSNs) owned by Sinclair Broadcast Group. That marks the most overt partnership between a sports wagering operator and a media company to date. The broadcast company got a 15 percent equity stake in Bally’s — an asset that’s clearly appreciating. Sinclair has rights to own another 15 percent if certain financial objectives are met.

Through the deal, Bally’s partners with networks that have broadcasting rights for 12 NHL, 16 Major League Baseball (MLB), and 17 NBA franchises.

There’s More, Maybe, for Bally’s Stock

Jonas’s enthusiasm for Bally’s doesn’t end with the $80 forecast. The analyst notes that under an extreme bull case scenario, the shares could reach $150, or more than double where the name trades today.

The analyst adds that the coming full-scale launch of the Bally’s brand across media, digital, and physical platforms should close the valuation discount between the company and rival gaming companies with heavy online footprints.

In the current environment, analysts and investors are smitten by gaming companies with iGaming and sports betting exposure. But Bally’s is still is a land-based casino operator, too. The company runs 15 gaming properties in 11 states when pending purchases close.

On that note, Jonas sees challenges delivered by the coronavirus pandemic turning to tailwinds as more Americans get vaccinated.

Multi-Million Dollar Bids

Earlier this week, Bally’s proposed a $650 million casino in Richmond, Va., joining two other groups in seeking access to Virginia’s capital city.

The company is the highest of the three bidders, and its proposal includes a $100 million upfront payment to the city.

“We are positive on today’s announcement overall, with management entering the competition to try to win the last, and likely most profitable, Virginia casino license,” said Stifel analyst Steven Wieczynski in a note.

That analyst says the $650 million pitch implies adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $78 million to $148 million at the Richmond venue, assuming Bally’s is selected.

That translates to $5 a share. If Bally’s is victorious, it could open the venue in 2024.