Red Rock Resorts, a “compelling growth story”


Red Rock Resorts (RRR) a ‘compelling growth story’ – Jefferies

By Sam Boughedda

Red Rock Resorts (NASDAQ:) launched with a buy rating and price target of $50 per share at Jefferies on Wednesday.

An analyst invests in a note that the hotel and casino company has a “compelling growth story,” with “valuable real estate assets strategically located in a booming Las Vegas neighborhood.”

“At the current pace of investment, we believe RRR’s EBITDA could grow 70% over the next decade. Although timing risk and macroeconomic uncertainties persist, the company’s balance sheet has been largely derisked, allowing to grow one step at a time while returning capital to shareholders,” explained the analyst.

She described the company as a “pioneer” in its early days, adding that it dominated the market for Las Vegas residents.

“Today it owns and operates six major casinos and intends to double that number by 2030. Durango, the first in the pipeline, is expected to open by fall 2023 and generate $140 million in revenue. Additional EBITDA by 2026. With 77% of the budget locked in today, the risk of cost overruns is mitigated.Given a base FCF of over $400m, we expect RRR self-finances these projects and keeps leverage below 4X. At the same time, returns to shareholders are expected to continue,” she wrote.


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