Caesars Inventory Trades at Traditionally Low Valuation, Says Analyst

• The downtrodden inventory is exhibiting indicators of life
• Analyst says lower-end Las Vegas leisure developments are stabilizing
• Rate of interest cuts may enhance the shares

Following a dismal exhibiting in 2025, Caesars Leisure (NASDAQ: CZR) inventory is up 6% to begin 2026, and even with that rally, the valuation stays depressed relative to historic norms.

Harrah’s Las Vegas. An analyst says operator Caesars inventory is reasonable. (Picture: Caesars Leisure)

That’s in keeping with Texas Capital analyst David Bain, who, in a brand new report, charges the Harrah’s operator a “purchase” with $59 value goal, implying the inventory can greater than double from present ranges. Amid indicators of stability on the Las Vegas Strip, the place Caesars is the second-largest operator, Bain says Caesars’ earnings earlier than curiosity, taxes, depreciation, amortization, and restructuring or lease prices (EBITDAR) ought to develop roughly 6% this 12 months.

We proceed to mannequin Las Vegas year-over-year progress starting in 2Q26E with sustained year-over-year enhancements all year long,” observes Bain. “We imagine CZR’s historic low valuation augments in 2026 pushed by LV progress, continued regional stability/progress, vital digital progress and a decrease rate of interest surroundings.”

Bain made no changes to the corporate’s fourth-quarter Las Vegas estimates. Caesars is scheduled to ship these outcomes on February 17.

Caesars Inventory Might Get a Las Vegas Carry

Final 12 months, Las Vegas visitation was pinched by a wide range of macroeconomic elements, together with Canadians responding to US commerce tariffs and excessive unemployment in neighboring California, however there’s perception on Wall Avenue that 2026 will likely be kinder to Strip operators.

Bain notes a powerful conference calendar may bolster numerous Caesars Strip properties with tax perks from the One Huge Stunning Invoice (OBBB) going into impact this 12 months, doubtlessly offering some ballast to Caesars Las Vegas and regional casinos, in addition to its digital unit.

He provides that there’s nonetheless “softness” amongst “lower-end” leisure clients in Las Vegas, however these developments are stabilizing. That’s materials to each Caesars and MGM as a result of many cost-conscious customers are feeling priced out of Las Vegas, however are desperate to return if gaming corporations improve their worth propositions.

On the digital facet of the enterprise, Bain pared his fourth-quarter earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) estimate to $70 million from $84 million to account for October’s maintain disruption, however he additionally talked about Caesars as a possible beneficiary of Maine’s current shock choice to approve iGaming.

Extra Price Cuts Would Assist Caesars Inventory

Carrying one of many trade’s largest debt burdens, Caesars is tethered to financial easing by the Federal Reserve, with Bain noting that for each 100 foundation factors charges decline, the gaming firm saves an estimated $60 million in annual curiosity bills. Nevertheless, an unprecedented prison investigation by the Justice Division into Fed Chair Jerome Powell may name into query the central financial institution’s charge minimize plans for the approaching months.

The constructive information for Caesars buyers is that on the idea of an estimated 2026 free money stream (FCF) yield of twenty-two%, the inventory is undeniably low cost.

“At an 11% FCF yield shares would commerce for $50, over double yesterday’s closing value. At 7.5x EV/EBITDA, nonetheless over 1.5x beneath its historic common, CZR would commerce for $40 a share, ~60% greater than yesterday’s closing value,” concludes Bain.