Boyd Gaming (BYD) presents a compelling investment opportunity at its current price of $69.21, with strong potential for appreciation as the Las Vegas Locals (LVL) market continues to improve. The company's diversified business model, operational excellence, and strategic capital investments position it well to outperform in 2025. While facing some competitive pressures, Boyd's market leadership and financial strength support our bullish outlook.

We’ll cover:

• Stock Recommendation: BUY at current level $69.21

• Option Recommendation: BUY September 75 call for $3.80

Company Overview

Boyd Gaming Corporation operates as a multi-jurisdictional gaming company across four segments: Las Vegas Locals, Downtown Las Vegas, Midwest & South, and Online. Founded in 1975 (celebrating its 50th anniversary this year), the company has grown from a single downtown Las Vegas property into one of the largest regional gaming operators in the United States.

With 16,129 full-time employees and led by CEO Keith Smith, Boyd Gaming owns and operates 28 gaming properties across 10 states, including eight casinos in the Las Vegas metropolitan area. Key Las Vegas Locals properties include Gold Coast, The Orleans, and Suncoast.

Las Vegas Locals Market Trends

The Las Vegas Locals market is showing encouraging signs of recovery and growth:

✔ Gaming revenue has risen at a 5.1% compound annual growth rate (CAGR) since 2019, outpacing workforce growth

✔ Gaming revenue per member of the workforce is up 4.2% over the last 12 months

✔ Deutsche Bank projects modest growth for the Las Vegas Locals gaming market in 2025

✔ Boyd's Las Vegas Locals business achieved market share growth in recent quarters

While the market faces some headwinds from Red Rock Resorts' new Durango Casino & Resort (opened December 2023), which has caused some cannibalization, Boyd's diversified portfolio and strategic investments position it to weather this competition effectively.

Financial Strength

Boyd Gaming's financial performance demonstrates remarkable strength and resilience:

• Q4 2024 Revenue: $1.0 billion (up from $954.4 million in Q4 2023)

• Full Year 2024 Revenue: $3.9 billion (up from $3.7 billion in 2023)

• Profit Margin: 14.70%

• Operating Margin: 24.99%

• Return on Equity: 34.76%

• Property-level Operating Margins: Over 40%

• Quarterly Earnings Growth: 84.10% year-over-year

The company maintains a solid balance sheet with $317.49 million in cash and strong operating cash flow of $957.08 million, providing ample flexibility for continued investments and shareholder returns.

Competitive Positioning

Boyd Gaming maintains a leading position in the Las Vegas Locals market:

• Market Share: 3.60% (compared to Red Rock Resorts at 1.77%)

• Diversification Advantage: Operations across multiple segments and geographic regions provide stability compared to more concentrated competitors

• Capital Investments: Ongoing renovations at The Orleans and Suncoast expected to drive revenue growth in 2025

• Online Growth: Strong performance in the Online segment provides additional growth avenue

While facing competition from Red Rock Resorts (particularly its new Durango property) and Golden Entertainment, Boyd's diversified business model and market leadership position it well for continued success.

Valuation & Market Sentiment

Boyd Gaming appears attractively valued at current levels:

• Current P/E: 10.96

• Forward P/E: 9.56

• EV/EBITDA: 7.71

• Analyst Consensus: Moderate Buy (8 Buy, 6 Hold, 0 Sell ratings)

• Average Price Target: $86.08 (24.38% upside from current price)

• Highest Price Target: $100.00

• Lowest Price Target: $77.00

The absence of sell ratings is particularly noteworthy, indicating that even the more cautious analysts see value at current price levels.

Technical Analysis

The technical picture for Boyd Gaming supports our bullish thesis:

• Currently trading above its 200-day moving average ($66.03), indicating a bullish long-term trend

• Recent pullback from highs around $80 represents a potential buying opportunity

• 1-year performance of +10.40% demonstrates solid momentum

• 5-year performance of +517.40% shows exceptional long-term value creation

Key support levels exist at $65-$66, with resistance at $75 and $80.50 (52-week high).

Investment Thesis

Our bullish investment thesis for Boyd Gaming is built on six key pillars:

1. Las Vegas Locals Market Recovery: Improving trends in gaming volumes and market share gains

2. Operational Excellence: Consistently strong margins and financial performance

3. Strategic Capital Investments: Property renovations driving future growth

4. Attractive Valuation: Compelling valuation metrics relative to growth prospects

5. Diversified Business Model: Reduced risk compared to more concentrated competitors

6. Strong Technical Setup: Long-term uptrend intact despite recent pullback

Risk Factors

Investors should be aware of these potential risks:

1. Competitive Pressures: Ongoing competition in the Las Vegas Locals market, particularly from Durango Casino

2. High Debt Levels: Total debt of $3.93 billion with a debt-to-equity ratio of 248.57%

3. Economic Sensitivity: Gaming industry vulnerability to economic downturns

4. Rising Costs: Increasing labor, insurance, and energy costs could pressure margins

However, we believe these risks are more than offset by Boyd's strong market position, operational excellence, and growth opportunities.

Option Strategy

For investors seeking leveraged exposure with defined risk, we recommend the September 75 call option at $3.80. This strategy offers:

• Reasonable premium relative to potential upside

• Strike price ($75) aligned with technical resistance levels

• Sufficient time for property renovations to impact financial results

• Exposure to Q2 2025 earnings as potential catalyst

• Break-even price ($78.80) below the average analyst price target ($86.08)

Trade Of The Week

How to Trade BYD

We see BYD’s upside as a clear, long opportunity. Here’s how we’re playing it:

🟩 Long Position

Initiate a long position on BYD at $69.21 to capitalize on long term upside opportunity.

🟩 Options Play: Long Call

For traders looking to profit with defined risk, consider a long call:

📉 Buy the September 19th 75 Call for $3.80

This trade allows you to take advantage of BYD’s upside while limiting exposure

In Conclusion…

Boyd Gaming represents a compelling investment opportunity at current levels. The company's strong position in the improving Las Vegas Locals market, operational excellence, and strategic investments support our bullish outlook. With an attractive valuation, positive analyst sentiment, and strong technical setup, we recommend buying Boyd Gaming at the current price of $69.21, with the September 75 call at $3.80 offering an attractive options strategy for those seeking leveraged exposure.

The combination of improving slot and gaming volumes in the Las Vegas Locals market, Boyd's operational efficiency, and strategic capital investments creates a favorable backdrop for share price appreciation in 2025.

For more in-depth trading strategies and market insights, upgrade to the paid version of our newsletter.

Sincerely,
The Resilient Trader