Morgan Stanley upgrades Boyd Gaming stock rating on valuation

Morgan Stanley raised Boyd Gaming's stock rating to Overweight from Equalweight, cutting its price target to $83.00 from $89.00. Analyst Stephen Grambling noted that the shares currently trade at about 6 times next-twelve-months enterprise value to EBITDA, significantly below the 8.5 times average from 2016-19 and 2024-26. The stock's P/E ratio of 2.99 further highlights this discount, positioning the stock among undervalued opportunities on InvestingPro's Most Undervalued stocks list.

Potential catalysts include stable fundamentals, options for more aggressive capital returns, and the upcoming Norfolk project opening. Morgan Stanley expects steady growth in Boyd Gaming's core local and regional markets, with an estimated 1.5% EBITDA compound annual growth rate excluding digital through 2028, and a regional market growth rate of about 3%.

Gaming stocks have declined by 15% on average since the end of July, with Boyd Gaming shares falling 20% during the same period. The S&P 500, however, rose by 15% during this timeframe. Morgan Stanley suggests the market is pricing in double-digit revenue declines, seeing Boyd Gaming's ability to outpace competitors in local markets while facing limited new competition in regional markets.

Despite strong EBITDA results, Mizuho reduced its third-quarter 2026 property EBITDAR estimate to $335 million from $342 million, citing weaker-than-expected Downtown segment performance and lowering its price target to $102 while maintaining an Outperform rating. Stifel raised its price target to $92 from $91, maintaining a Hold rating, as Boyd Gaming's second-quarter results were steady in Las Vegas, with expected performance in the Las Vegas Locals market.

Citigroup also kept a Market Perform rating on Boyd Gaming, pointing to potential challenges due to weather-related disruptions affecting visitor numbers from Hawaii. Goldman Sachs reported a slowdown in regional casino revenues in August, partly attributed to calendar shifts. These developments showcase a blend of positive earnings performance and cautious outlooks from analysts.