By Paul R. La Monica

Investors who gambled on Caesars Entertainment in 2024 rolled snake eyes. Their luck may be about to change.

Caesars tumbled nearly 30% last year, underperforming rivals MGM Resorts International, Wynn Resorts, and Las Vegas Sands. But Wall Street is betting on a turnaround in 2025. The consensus price target for the stock is nearly 65% higher than its current level. How can it get there? Vegas, baby. Vegas.

In addition to its namesake Caesars Palace on the Las Vegas Strip, the company owns other top Sin City hotels and casinos, such as the Flamingo, Harrah's, Paris, and Planet Hollywood. These destinations could all get a lift from the fact that two other top resorts in Las Vegas, the Mirage and Tropicana, have recently shut their doors for good even though the Strip should continue to shine.

"Vegas continues to hold up and is showing no signs of slowing at this point," wrote Stifel analyst Steven Wieczynski in a recent report. He has a target price of $63 for Caesars, more than 90% above Thursday's close of $32.59.

Caesars has also made strides with its online sports betting business, which competes with industry leaders DraftKings and Flutter Entertainment-owned FanDuel, Wieczynski added. Digital revenue surged more than 40% in the third quarter of 2024 and is likely to keep growing in the fourth quarter and throughout 2025. "We remain confident in management's ability to eventually unlock the value of the company's sports and iGaming franchises in a way that significantly enhances shareholder value," he wrote.

Investors should also keep an eye on Carl Icahn, who purchased a more than 1% stake in Caesars in 2024. Icahn held a large activist position in the company in 2019 but eventually sold his stake after Caesars agreed to merge with rival Eldorado Resorts in a $17 billion deal in 2020. Even if his new position is a passive one -- Barron's has reached out to Icahn Enterprises for comment -- it's worth noting that Icahn is once again bullish on the stock.

Caesars could also get a big, even super, boost from the fact that the Super Bowl will be played in New Orleans in February -- and at the Caesars Superdome, to boot. The potential benefit for the company goes beyond brand awareness. Caesars recently completed a nearly half-billion-dollar renovation on the Caesars hotel (formerly branded as Harrah's) in the Big Easy.

"The feel of the property differs materially, and we liken it to a new Las Vegas asset, making it a premier destination for middle- to high-end customers," wrote Jordan Bender, an equity research analyst at Citizens JMP who recently toured the hotel. He estimated that New Orleans could help boost overall revenue for Caesars by $50 million to $60 million in 2025. Bender's price target is $59.

There are risks, of course. It's not clear if the New Year's attacks in New Orleans and Las Vegas will deter tourists. Caesars is also not a cheap stock, trading at about 25 times earnings estimates for 2025 compared with price/earnings ratios in the mid to high teens for many of its rivals.

But a wager on Caesars should pay off as long as the resilient U.S. consumer keeps spending -- and gambling.

Write to Paul R. La Monica at paul.lamonica@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

January 03, 2025 01:30 ET (06:30 GMT)

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