Silverman's Carlton Recommends Caesars Entertainment as Strong Buy
Caesars Entertainment (NASDAQ: CZR) is a Strong Buy, according to Silverman Advisory Group's Henry Carlton, who believes the entertainment group is set for an impressive 2023.
Caesars enjoyed strong demand across all verticals last quarter and generated record-high earnings in its Las Vegas and regional segments. The chain also saw occupancy at its resorts rise above 95% for the first time since the onset of the COVID-19 pandemic.
Caesars still finished last quarter with a net loss of $148 million, but this was a substantial improvement on 2021's fourth-quarter loss of $434 million.
Carlton says these strong Q4 results in themselves are reason to be positive about the direction of Caesars, but are not the main reason behind his company's recommendation.
"Caesars is bouncing back strongly on home soil, but it is the opportunities that look set to open up in the UAE that really excite me," said Carlton, a senior broker at Silverman.
"The company have very smartly gained a foothold in the country for several years, and now find themselves in an excellent position to take advantage of the expected legislative changes, which they will have been lobbying for behind the scenes."
The legislative changes Carlton refers to are a possible relaxation of the UAE's traditionally strict laws forbidding gambling.
The lesser-known Ras Al Khaimah emirate has already announced that it plans to regulate gambling at selected resorts, and sources suggest that all seven emirates will soon permit gambling in some form.
Caesars Entertainment opened the Caesars Palace Dubai resort in 2018, their first in the middle east and the company's only resort without an integrated casino.
Regional president Anthony Costa has already confirmed that the company will "look closely" at the possibility of adding gambling facilities should the opportunity arise.
"That acceptance now that there is going to be the potential of gaming in the UAE, in whatever form it's going to be, allows people like Caesar's and MGM as well to look at that closely," said Costa, as reported by Reuters. "I think it's wonderful."
Carlton believes that Caesars' head start of already operating in the region will prove crucial in seeing the company gain an impressive market share.
"MGM, Wynn, they're only just putting spades in the ground," he continued. "Caesars have an operational resort and an established working relationship with the relevant authorities. They have positioned themselves perfectly to become the major player in the region."
Carlton is certainly not alone in his confidence in Caesars, with the company having a median price target of $70, representing more than a 60% increase from the current price of $43.53. Higher forecasts see the stock doubling in price over the next 12 months.
Large investors have also been increasing their stakes in Caesars. Vanguard Group Inc. and State Street Corp increased their stakes in the company by 1% and 2% respectively in the third quarter of 2022, following on from Point Break Capital Management LLC, which increased its stake in Caesars Entertainment by 10.3% in the first quarter.
The opportunities presented by the emerging situation in the UAE are attracting attention, and Carlton appears correct in his assessment of Caesars' positioning to gain a strong market share. Industry rivals will not just be throwing the towel in though, and despite their later start possess the weight to ensure there is no room for complacency.
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