Caesars Stock Has ‘Favorable Setup,’ Says Analyst

Caesars Entertainment (NASDAQ: CZR) shed more than a quarter of its value over the past 12 months and resides 30.57% below its 52-week high, but some analysts believe the stock is a prime rebound candidate in 2025.

Deutsche Bank’s “Fresh Money List” and Analyst Rating

The casino giant made the cut as one of eight consumer equities on Deutsche Bank’s “Fresh Money List” for the first quarter, with analyst Carlo Santarelli rating the stock a “buy” with a 12-month price target of $58. That implies potential upside of 74% from today’s closing print. The analyst noted Caesars stock currently sports a depressed though compelling multiple.

“At current levels, we believe the risk-reward skews favorably, such that if the aforementioned positives play out, given current valuation, upside potential is meaningful, and as such, CZR shares represent a compelling Buy idea,” wrote Santarelli.

Potential Catalysts for Caesars Stock

While some regional gaming markets have recently struggled, weighing on shares of operators, Santarelli sees Caesars’ permanent venues in Nebraska and Virginia and its revamped casino hotel in New Orleans emerging as possible catalysts for the stock this year. Caesars New Orleans may have gotten a boost in the fourth quarter due to Taylor Swift concerts in the city and could be in a lift in the current quarter because the Super Bowl will be played there next month.

Transactions Could Boost Caesars Stock

Last year, Caesars sold the World Series of Poker (WSOP) and the LINQ Promenade on the Las Vegas Strip, grossing $525 million in proceeds, and there’s another $250 million due from WSOP buyer NSUS Group Inc. in several years. Those deals could be harbingers of more to come this year as the gaming company looks to pare one of the industry’s largest debt burdens.

“Post the recent sale of the World Series of Poker brand and the LINQ Promenade, we believe CZR remains focused on monetizing non-core assets, such as excess real estate, including raw land, and potentially seeking a strategic alternative to unlock the value tied to the Interactive segment,” adds Santarelli.

Potential Sale of Digital Assets

In recent weeks, there’s been increasing speculation that the gaming company could examine selling its digital assets, including Caesars Sportsbook, as an avenue for unlocking shareholder value. Management is reportedly frustrated that the share price doesn’t reflect the digital arm’s improved performance. Santarelli notes that based on Caesars’ current share price, investors are getting the interactive business for free.

“We believe the Interactive segment garners little to no credit, and while out year guidance could be perceived as lofty, any modicum of valuation for the business furthers our view that the core business valuation is attractive at current levels,” said the analyst.

Las Vegas Headwinds Could Ease

Caesars is the second-largest operator on the Las Vegas Strip — a status that’s been a headwind to the stock over the past several quarters due to softness among cost-conscious consumers that frequent some of the operator’s properties.

That script could flip in the first half of this year as operators of higher-end Strip venues face tough comparisons that most likely won’t weigh on Caesars.

“Given CZR’s more limited reliance on high-end play, which, when coupled with favorable high-end hold, was a meaningful driver of outperformance for Strip peers in the 1H24, we believe CZR faces easier compares in the 1H25, which should allow CZR to outperform, on a relative basis,” concludes Santarelli.

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