CFRA Research reaffirmed its "sell" rating on Caesars Entertainment (NASDAQ: CZR), lowering the price target from $35 to $27, suggesting a potential 17.1% decline from the current $32.59 share price. The stock dropped 2.48% on 2025's first trading day amid concerns about the company's financial position.

CFRA analyst Zachary Warring maintains 2024 and 2025 earnings per share estimates at -$0.05 and $0.75, respectively. The analyst cites Caesars' over-leveraged balance sheet and challenging year-over-year comparisons as key concerns, despite recent revenue growth from acquisitions.

As the largest U.S. gaming company by property count, Caesars recently expanded with the Caesars Virginia casino in Danville, a joint venture with the Eastern Band of Cherokee Indians. However, the company's significant debt burden remains problematic, with a trailing-12-month EBIT/interest expense ratio of 1.0x.

To address its debt, Caesars may need to continue selling assets. In 2024, the company generated $525 million through the sale of the World Series of Poker to NSUS Group Inc. ($500 million total, with half paid) and the LINQ Promenade to TPG Real Estate and Acadia Realty Trust ($275 million).

Industry analysts suggest Caesars might consider spinning off its digital operations, including Caesars Sportsbook, to generate additional capital for debt reduction. The company's fourth-quarter results will be released after market close on February 25, 2025.

Related Articles

Previous Articles