Stifel maintains Hold on Bally’s stock amid covenant concerns

Stifel has reaffirmed a Hold rating and set a $13.00 price target for Bally’s Corp (NYSE:BALY) after reviewing the company’s recent financial performance. In its second-quarter report, Bally’s fell short of the adjusted EBITDAR expectations, primarily due to a UK tax increase. However, the Casinos & Resorts segment managed to beat consensus estimates, with adjusted EBITDAR growth in line with its competitors.

The firm highlighted a new potential going concern risk factor in its latest 10-Q filing, citing liquidity and target leverage covenant non-compliance. Stifel believes that Bally’s management intends to regain compliance before the end of the waiver period, with the pending Bronx pre-construction loan and a possible equity investment playing a crucial role in this plan.

Despite these challenges, Bally’s is currently seen as undervalued by InvestingPro, with the stock trading below its Fair Value. Stifel's analysis is part of a broader platform that offers Pro Research Reports covering Bally’s and over 1,400 other U.S. equities. The company has also executed a non-binding term sheet for the Bronx project in July, and views management’s plan to regain compliance as credible.

Stifel's model and $13 price target are currently under review, with the expectation that shares will trade mainly on updates related to the development projects and financing.