Caesars Stock Among Most Loved Names Heading Into 2022

Posted on: December 28, 2021, 11:27h. 

Last updated on: December 28, 2021, 11:39h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

With just a few trading sessions left in 2021, Caesars Entertainment (NASDAQ:CZR) is higher by almost 27 percent year-to-date, putting the stock mostly inline with the S&P 500.

Caesars stock
Caesars Palace on the Las Vegas Strip. Caesars stock enters 2022 favored by Wall Street. (Image: CNBC)

However, when the closing bell on 2021 sounds, investors may be left pondering what could have been. Shares of the Harrah’s operator were, at times, on a blistering pace, easily ranking as one of the best-performing gaming equities, on its way to a triple-digit price tag.

While Caesars stock is off 19 percent over the past 90 days and is 22.25 percent below its 52-week high, those gloomy data points paint the picture of a stock with significant rebound potential. In fact, the casino giant remains one of Wall Street’s preferred gaming ideas despite headwinds created by the omicron variant of the coronavirus.

Wall Street is also betting on several reopening plays in the new year. While the vaccine rollout supported the economic recovery this year, several Covid-19 variants slowed the return to normal from the pandemic, putting some airlines and entertainment stocks at risk,” according to CNBC.

Some analysts point out that Caesars is being hampered by non-recurring events. Those include a slow recovery from Hurricane Ida in New Orleans and some rooms in Atlantic City being offline because of enhancements.

Caesars Stock Screens Well

CNBC ran a screen for stocks that offer at least 10 percent from current levels to analysts’ 12-month price targets, and also have at least 70 percent “buy” ratings from the sell side.

Caesars is the only gaming name that checks both boxes, and its upside potential from current levels relative to analysts’ average price forecast is substantial. Today, the gaming equity trades just over $93. But the consensus price target on the name is north of $137. Las Vegas very well could be the catalyst for the stock’s 2022 bullishness.

Caesars is the second-largest operator on the Strip, where it derives approximately 43 percent of its property earnings before interest, taxes, depreciation, and amortization (EBITDA).

Adding to the case for Caesars in 2022 is that some analysts are forecasting Strip revenue growth of 20 percent or more — an estimate that doesn’t include normalization of convention and international travel trends in the latter half of the year.

What to Expect From Caesars in 2022

Forecasting exactly how Caesars stock will perform in 2022 is a fool’s errand. But there are some catalysts industry observers and investors can plan for.

Notably, the operator could announce the sale of one of its Las Vegas assets early next year. Recent prices on Strip venue sales have analysts excited about what Caesars could command in such a transaction.

Caesars’ ability to continue boosting margins, cost-reduction efforts, and the asset sale are among the factors that could spark a rebound in the downtrodden stock.