Stifel has maintained a Hold rating on Monarch Casino & Resort (NASDAQ: MCRI) and increased the price target to $77.00 from $72.00.

The firm’s analyst noted Monarch Casino reported a strong third-quarter adjusted EBITDA, exceeding expectations by 6%. This performance was attributed to stable trends across the company’s two properties.

The Atlantis Casino Resort in Reno has seen measured growth, estimated to be roughly flat year-over-year. Factors such as robust economic conditions in Reno have been counterbalanced by subdued activity from low-income players, wage pressures, competitive promotions, and disruptions due to room renovations.

On the other hand, the Black Hawk property continues to experience a steady increase, with estimated adjusted EBITDA growing at a mid-single-digit percentage year-over-year. This growth is driven by increased local awareness and capturing a larger share of the Denver area’s mid-to-high net-worth gaming market.

Stifel’s outlook for Monarch Casino & Resort remains cautiously optimistic, citing the company’s leading market position in growing economies, a debt-free balance sheet, consistent return of capital to shareholders, full ownership of real estate, and a competent management team.

Despite these strengths, the analyst suggests that the stock may continue to trade within a narrow range until there is an improvement in regional gaming fundamentals or a reduction in competitive challenges in Reno.

InvestingPro Insights

Recent data from InvestingPro adds depth to Stifel’s analysis of Monarch Casino & Resort (NASDAQ:MCRI). The company’s market cap stands at $1.36 billion, with a P/E ratio of 16.85, suggesting a reasonable valuation in line with Stifel’s cautious optimism. MCRI’s impressive gross profit margin of 66.22% for the last twelve months ending Q2 2024 underscores the company’s operational efficiency, supporting Stifel’s positive view on its market position.

InvestingPro Tips highlight that MCRI has been profitable over the last twelve months and analysts predict continued profitability this year, aligning with Stifel’s outlook on the company’s performance. Additionally, the tip noting that MCRI operates with a moderate level of debt corroborates Stifel’s mention of the company’s debt-free balance sheet, a factor contributing to its financial stability.

For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide further insights into MCRI’s financial health and market position.

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