What Happened?
Shares of hotel and casino entertainment company Caesars Entertainment (NASDAQ: CZR) fell 2.9% in the morning session after an analyst at Jefferies downgraded the company's stock from "Buy" to "Hold.". The analyst also significantly lowered the price target on the shares to $22 from $39. The downgrade followed Caesars' recent third-quarter results that fell short of expectations, particularly in Las Vegas, where performance was down 20% compared to the previous year. The research note expressed low confidence in Caesars' ability to grow in its Las Vegas and regional markets. It also cited concerns about the company's growth path and noted that factors outside of the company's control could require more capital, which would limit potential gains for the stock.
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What Is The Market Telling Us
Caesars Entertainment’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 6.6% on the news that the company expressed optimism about a strong comeback for its Las Vegas business following a recent travel slump. This positive outlook seemed to overshadow a recent earnings report where the company missed analyst estimates. Caesars reported a loss of ($0.27) per share, which was worse than the expected ($0.11) loss. Revenue for the quarter also came in at $2.87 billion, slightly below estimates and down 0.2% from the previous year. During an earnings call, CEO Tom Reeg acknowledged that the Las Vegas properties saw a dip in room rates and occupancy over the summer. However, he also noted signs of improvement and stated that the company expected the next year to be a record-breaking one for conventions and group business, which was vital for its recovery.
Caesars Entertainment is down 38.6% since the beginning of the year, and at $20.01 per share, it is trading 51.3% below its 52-week high of $41.11 from November 2024. Investors who bought $1,000 worth of Caesars Entertainment’s shares 5 years ago would now be looking at an investment worth $383.33.
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