Caesars Dealing Investors a Winning Hand of Digital and Physical Gaming Demand; Shares Worth a Wager

With Caesars having already announced fourth-quarter results in January (roughly in line with our forecast), the key takeaways from the call were digital segment EBITDA reaching its 50% return on investment target in 2025, and there being no signs of demand slowdown so far in 2023 in its U.S. casino businesses. We think shares have been unduly held back by cyclical and balance sheet cost concerns. We maintain our view that Caesars’ revenue will grow further in 2023, driven by the human-ingrained desire for travel, shift to service consumption, remote work flexibility, digital business strength, and a strong event calendar in Las Vegas. We plan to increase Caesars’ $80 fair value estimate around a low-single-digit percentage and think investors should consider dealing themselves shares.