FLL: Colorado Ramp Will Drive Deleveraging And Support Bullish Future Upside

Analysts have modestly reduced their price target on Full House Resorts, trimming it by about $1.00 to reflect a slightly lower earnings multiple and profit margin outlook. At the same time, they highlight better Colorado revenue trends and the importance of that market in deleveraging the balance sheet.

Analyst Commentary

Analyst views on Full House Resorts have turned more mixed, with recent revisions reflecting both confidence in operational progress and concern about execution risk and balance sheet leverage.

Bullish Takeaways

• Bullish analysts highlight that Q3 revenue and EBITDA outperformance supports the view that the company can still grow earnings despite recent multiple compression.
• Improving Colorado trends, including a 7 percent revenue increase and operational tweaks at the property, are seen as an early proof point that management changes are driving better execution.
• The ramp up in Colorado operations is viewed as a key growth catalyst that can enhance cash flow, supporting deleveraging and, over time, potential upside to the current price targets.
• Some see the lower price targets as resetting expectations to a more achievable level, which may reduce downside risk if the company continues to deliver incremental operational gains.

Bearish Takeaways

• Bearish analysts point to rating downgrades and reduced price targets as evidence that the risk reward profile has moderated, with less near term upside relative to prior expectations.
• Concerns remain that, despite recent improvements, the pace of profit margin expansion could be slower than previously modeled, limiting multiple expansion potential.
• Execution risk around the continued ramp in Colorado and other projects, particularly in the context of existing leverage, is cited as a reason to adopt a more cautious stance.
• Some see the current valuation as more fairly reflecting both the company growth opportunity and the balance sheet and construction risks, leaving limited room for disappointment on future quarters.

Valuation Changes

• Fair Value: unchanged at an implied $3.75 per share, indicating no shift in the core valuation anchor.
• Discount Rate: steady at 12.5 percent, signaling an unchanged view of the company risk profile.
• Revenue Growth: effectively unchanged at about 9.2 percent, reflecting stable top line assumptions.
• Net Profit Margin: fallen slightly from roughly 8.13 percent to about 8.08 percent, modestly reducing projected profitability.
• Future P/E: risen slightly from about 6.05x to roughly 6.09x, suggesting a marginally higher valuation multiple on forward earnings.