At least one analyst is bullish for Caesars Entertainment ($CZR), especially after it plans to eliminate its occupancy restrictions at its Las Vegas casinos.
On top of this, Caesars is moving forward with its first non-gaming resort in Scottsdale, Arizona.
Occupancy restrictions impacting Caesars stock
At the height of the pandemic, Las Vegas casinos implemented several safety measures to calm the spread of COVID-19. One of these measures was a cap on the number of customers at each property.
B. Riley analyst David Bain sent a note to clients giving $CZR a “buy” rating with a $183 target price.
Caesars is down 18% year-to-date, and as of writing, shares of the company were trading at $77.35.
Bain’s note implies the stock could double from its April 1 close of $76.65. Part of Bain’s evaluation stems from recent hires made by the company at its Las Vegas Strip locations to accommodate the recent influx of customers.
In addition, Caesars recently cut back on its ad spending, which could help slow its cash burn rate.
“With the [occupancy] cap eliminated, we believe CZR’s Las Vegas occupancy will trend closer to pre-COVID levels or 10 points higher. We calculate added occupancy equates to close to $150 million earnings before interest, taxes, depreciation, and amortization.”
Influx of cash for Caesars and operations
Caesars has $1 billion on the table from its sale of William Hill international operations. Additionally, the company is considering selling one of its casinos on the Vegas Strip.
- Flamingo Las Vegas
- Bally’s Las Vegas
- Paris Las Vegas
- Planet Hollywood Resort & Casino
According to Bain, a significant influx of cash could be on the horizon, with a Strip property potentially netting $3 billion.
“While speculation is running rampant regarding which Strip venue Caesars will part with — Flaming, Paris and Planet Hollywood command the bulk of the chatter — and whether or not the operator will part with the sold asset outright or engage in a sale-leaseback, it’s clear Wall Street likes the idea because such a transaction will help Caesars pare leverage.”
Caesars non-gaming and hospitality
In partnership with real estate development company HCW, Caesars is moving forward with the Caesars Republic Scottsdale in the suburbs of Phoenix. This will be the first Caesars property in the US without any casino gaming.
The 11-story hotel will feature 265 rooms, several amenities, and two restaurants from famed Chef Giada De Laurentiis.
Caesars Republic Scottsdale is scheduled to open in 2024 but will begin accepting reservations from April through June in 2023.
In a statement, Caesars said the resort would “stand out” from other neighboring resorts.
“Once completed, Caesars Republic Scottsdale’s contemporary and expansive glass structure will stand out from other neighboring resorts. The architecture and interior design elements, which pay homage to Caesars Republic’s swanky Las Vegas roots, incorporate thoughtful materials and sleek, modern elements.”
Arizona only permits casino gaming by tribal operators. Guest will still be able to earn credits through the company’s loyalty reward program.