Century Casinos Extends Rally as Analysts See Room for 2025 Upside

Posted on: November 5, 2024, 02:55h. 

Last updated on: November 5, 2024, 03:08h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

After soaring nearly 12% Monday on the back of a solid third-quarter earnings report, Century Casinos (NASDAQ: CNTY) extended that rally on Tuesday, at one point trading at its highest levels since January after analysts noted there’s a path for the stock to move higher next year.

In a new report to clients, Stifel analyst Jeffrey Stantial reiterated a “buy” rating on shares of the regional casino operator while lifting his price target to $5 from $4. That implies upside of about 25% from current levels with the move arriving as the stock has surged 55.45% over the past month.

Nugget Casino, Rocky Gap, Mountaineer, & Poland all contributed to upside, though we were most encouraged by sequential improvement at Nugget Casino following recent property management changes with the Q3 exit-rate approaching pre-acquisition productivity,” wrote Stantial.

The Nugget refers to Century’s casino hotel in Sparks, Nev., its lone venue in the state. The operator acquired that establishment in February 2022. Since then, Century has struggled with a rough promotional environment in the Reno-Lake Tahoe market and management issues at its property, but the worst of those issues appear to be in the past, potentially signaling the Nugget could be a credible contributor to the operator’s fourth-quarter and 2025 results.

Century Casinos Could See Normalized 2025 Earnings

Owing to the gaming stock’s struggles for much of this year, Wall Street largely viewed Century as a 2025 story. The recent resurgence signals possible validation of that thesis.

“Shares have outperformed nicely T1M, though valuation still sits at the low end of peers while FY25 targets appear increasingly attainable,” added Stantial.

In addition to two gaming venues in its home state of Colorado, Rocky Gap in Maryland, the Nugget in Sparks, Nev., and the Mountaineer in West Virginia, Century runs a pair of Missouri casinos and several gaming properties in Canada.

Poland Sale Still on the Table

There’s long been chatter regarding Century potentially selling its two-thirds stake in Casinos Poland, which was delayed by Russia’s 2022 invasion of Ukraine and the subsequent influx of refugees from Ukraine to Poland. Many of those new residents of Poland have frequented Century’s gaming venues there, providing a topline boost.

During the third quarter, Century’s Poland operations beat Stifel estimates, according to Stantial, but that doesn’t imply management is averse to divesting a portion of that business.

On a conference call with analysts, Century executives said they’re open to selling what they described as noncore Poland assets following the completion of the relicensing cycle in that country.