Boyd Gaming stock: All signs point to a significant break higher

Key Points

• Boyd Gaming is down slightly a week after reporting fourth quarter earnings, but analysts continue to bid the stock higher. 
• The company competes in land-based (on-premises) and online gaming markets. 
• BYD stock is at a confirmed support level and would be one for investors to buy on the dip.  

Just a few days before the Super Bowl kicked off in Las Vegas, Boyd Gaming Corporation NYSE: BYD put the spotlight on Vegas in a different way. The Las Vegas-based company delivered its fourth quarter earnings report. The headline results showed earnings per share of $1.66 on revenue of $954.51 million. 

Both numbers exceeded analysts' estimates, with EPS falling slightly lower than the $1.72 the company booked in the same quarter in 2022. For the year, earnings were flat, but revenue was up 5% in the same period.  

Boyd did not issue full-year guidance for 2024, but analysts clearly liked what they heard. Since the earnings report, the Boyd Gaming analyst ratings on MarketBeat show that five analysts have reiterated their bullish ratings on BYD stock, with all five raising their price targets anywhere from 8% to 25%.  

Making up for lost time 

One reason for the bullish price projections may be a case of analysts making up for lost time. BYD stock is down over 4% in the last 12 months. Investors were sour on consumer discretionary stocks in 2023. However, that narrative didn't play out as expected. Especially when it came to entertainment stocks. As Boyd Gaming's results show, consumers are more than willing to spend at casinos. The company posted sequential revenue growth in every quarter and earnings growth in two out of four quarters.  

Analysts may be concerned about the capital expenditures that totaled $374 million in 2023 and are forecast to increase to between $400 and $450 million in 2024. But that seems to be well covered as the company has no near-term maturing debt and increasing free cash flow (FCF).  

Expected growth from online gaming 

In less than one generation, on-premises gaming has become mainstream. Since 2019, the next wave of growth in this sector has taken the form of online gaming (iGaming) space. Boyd captures this market in two ways.  

First, the company has an online casino, the Stardust Casino, which allows customers in select states to participate in online casino games. The company also has a 5% stake in FanDuel, which is owned by Flutter Entertainment plc NYSE: FLUT. FanDuel, along with DraftKings Inc. NASDAQ: DKNG, is one of the leaders in the rapidly growing online sportsbook market. 

One time weather may have actually made a difference 

Another reason the stock may be dipping post earnings is the company's near-term forecast. Boyd cited the winter storms and below-zero temperatures that moved through parts of the Midwest as a reason for potentially disappointing results in their Midwest and South regions in the current quarter. 

Investors can be skeptical when companies cite weather as a reason for missing revenue projections. Sometimes, however, the claim can be made with good reason. And this would appear to be one of those times. The company has seen improving trends since the storms have passed.  

A buyable dip may be coming 

The BYD stock chart shows the stock has dropped about 2% since the earnings report. That puts the stock at a confirmed support level just above its 200-day simple moving average (SMA) and just below its 50-day SMA.  

If the stock were to drop below that support line, it would be a buyable dip supported by the company's internal earnings estimates and bullish price targets from analysts.