Stephen Grambling, an analyst from Morgan Stanley, maintained the Hold rating on Red Rock Resorts (RRR – Research Report). The associated price target remains the same with $48.00.
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Stephen Grambling’s rating is based on a combination of factors including Red Rock Resorts’ recent quarterly performance and broader market dynamics. The company’s fourth-quarter results surpassed expectations with slightly better-than-anticipated revenues and operating costs, leading to a modest increase in EBITDA. However, despite these positive outcomes, there are concerns regarding the underlying demand in the core Las Vegas Locals market, as indicated by lower EBITDA margins from weaker sports hold.
Furthermore, while the new Durango property achieved a notable return in its first year, it has also led to some cannibalization in the neighboring market, which suggests a decline in the core market’s EBITDA and sluggish top-line growth. The planned expansions and renovations, like those at the Durango casino and Green Valley, may put pressure on the company’s financial results in the coming year. Therefore, Grambling’s Hold rating reflects a cautious outlook, balancing the current positive financial performance with potential challenges in maintaining growth.