Boyd Gaming trades higher after Morgan Stanley points to positive catalysts

Boyd Gaming Corporation (BYD) is on watch after Morgan Stanley boosted the casino stock to an Overweight rating from a prior perch of Equal-weight.

Analyst Stephen Grambling sees a combination of stable underlying fundamentals, optionality for more aggressive capital return, and the upcoming Norfolk project opening all creating catalysts for re-rating of the casino stock. "Importantly, the historical stability of the business and strong balance sheet create limited downside while also supporting material upside, amounting to one of the best risk-adjusted returns in our coverage," highlighted Grambling.

Crucially, Grambling and his team forecast stable growth in Boyd Gaming's (BYD) core markets with the market pricing in double-digit declines, which the firm sees as an opportunity. Morgan Stanley also sees greater stability in the Las Vegas locals market and regionals market regardless of Las Vegas Strip trends, fuel prices, and high interest rates. It was also noted that the casino company will face easier competitive comparisons ahead.

As a result of those factors, Morgan Stanley thinks valuations on Boyd Gaming (BYD) are attractive at the current level. The firm set a price target on BYD of $83.

Shares of Boyd Gaming (BYD) were up 3.4% in premarket trading to $72.50. The 52-week high for the casino name is $91.41.

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