Golden Entertainment Stock Still Has Plenty of Shine, Says Analyst

Posted on: October 8, 2021, 01:24h. 

Last updated on: October 8, 2021, 06:52h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Golden Entertainment (NASDAQ:GDEN) stock is up a staggering 159 percent year-to-date. But that doesn’t mean upside from here is capped, as at least one sell-side analyst sees the shares further appreciating.

Golden stock
The entrance to Golden Entertainment’s Strat, seen above. Golden Entertainment stock may have more gains ahead of it. An analyst says Las Vegas is one reason why. (Image: FOX5 Vegas)

In a note to clients today, Deutsche Bank analyst Carlo Santarelli reiterates a “buy” rating on the Strat owner, while boosting his price target to $60 from $56, implying upside of more than 17 percent from the Oct. 7 close. That’s slightly below the Wall Street consensus of $61.50. Since May, Santarelli has boosted his price estimate on Golden stock three times.

The analyst says Golden’s third-quarter trends should be “solid,” and that the current quarter is shaping up for more of the same, owing to strength at the operator’s Las Vegas and Laughlin, Nevada venues.

Las Vegas-based Golden operates 10 casinos, nine of which are in Southern Nevada, including the Strat.

Las Vegas Lifting Golden Stock

Vibrancy in Las Vegas is lifting an array of gaming equities this year, and Golden Entertainment is participating in that trend.

Santarelli says a fuller event schedule, coupled with “healthy” occupancy and booking trends, has Golden’s October looking like July – one of the operator’s best months to this point in 2021. That’s a sign the gaming company could beat third-quarter earnings, and that its fourth-quarter results could surprise the upside as well.

Analysts widely expect Golden Entertainment to post earnings before interest, taxes, depreciation and amortization (EBITDA) this year through 2023 that exceed the highs seen in 2019 prior to the coronavirus pandemic.

Analysts and investors also like the strength in Golden’s various businesses, including its gaming route unit (a business where they install slot machines in places like bars, restaurants, truck stops, etc.)and PT’s Entertainment, which controls 60 bars, pubs, and casual dining restaurants. Those are recovering strongly following the 2020 shutdowns forced by the COVID-19 pandemic.

More Catalysts for Golden Stock

Up more than 15 percent over the past month and already easily one of 2021’s top-performing casino names, Golden isn’t challenged for upside catalysts.

Some analysts believe the current share price doesn’t reflect the potential for Golden to land an attractive route business contract in Pennsylvania, and most agree the $1.2 billion in unused Las Vegas real estate the operator owns isn’t adequately priced into the shares either. Golden’s route business operates in Montana and Nevada, with Illinois and Pennsylvania possible near-term additions.

The company generates 85 percent of its revenue from the Las Vegas locals segment, and is the dominant force in hyper-local Las Vegas gaming offerings.