FLL: Colorado Ramp Will Drive Deleveraging Despite Recent Rating And Price Cuts

Analysts have modestly reduced their price target on Full House Resorts to approximately $3, reflecting a more cautious near term stance despite stronger Q3 revenue and EBITDA performance and growing confidence in Colorado's ramp up to help reduce leverage.

Analyst Commentary

Bullish Takeaways

• Bullish analysts highlight that Q3 revenue and EBITDA outperformance, particularly in Colorado, supports the view that the current valuation already discounts a more challenging macro backdrop.
• Improving operational trends in Colorado, following recent management tweaks at the property, are seen as a key driver of incremental cash flow and a path to moderating leverage over the next several quarters.
• The ramp up of the Colorado asset is viewed as the central pillar of the long term growth story, with successful execution there expected to enhance the company’s overall earnings power and justify multiple expansion from current levels.
• Despite lower price targets, bullish analysts maintain a constructive stance on the company’s ability to translate operational improvements into stronger free cash flow, supporting eventual balance sheet repair and equity value creation.

Bearish Takeaways

• Bearish analysts point to the recent reduction in price targets toward approximately $3 as evidence that execution risk around the Colorado ramp and broader portfolio remains underappreciated by some investors.
• There is concern that leverage, while expected to decline over time, could remain elevated longer than previously anticipated if ramp timelines slip, limiting strategic flexibility and weighing on valuation multiples.
• Some analysts argue that near term outperformance in Q3 may prove difficult to sustain across markets, potentially capping upside to consensus estimates and justifying a more neutral stance on the shares.
• With the shares now closer to revised target prices, bearish analysts see a less compelling risk reward profile, emphasizing that further upside will depend on flawless execution of the Colorado growth plan.

Valuation Changes

• Fair Value: Unchanged at $3.75 per share, indicating no revision to the core valuation anchor despite recent estimate tweaks.
• Discount Rate: Steady at 12.5 percent, suggesting no change in the perceived risk profile or required return for the equity.
• Revenue Growth: Risen slightly from approximately 9.23 percent to about 9.24 percent, reflecting a marginally more optimistic view of the top line.
• Net Profit Margin: Fallen slightly from roughly 8.08 percent to about 8.07 percent, implying a modestly more conservative view on profitability.
• Future P/E: Edged up marginally from about 6.09x to roughly 6.09x, signaling a very small increase in the multiple applied to forward earnings.