Wells Fargo analyst Daniel Politzer maintained a Buy rating on Churchill Downs (CHDN – Research Report) today and set a price target of $165.00.
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Daniel Politzer’s rating is based on the belief that Churchill Downs is currently undervalued following a significant drop in its stock price since the opening of the Rose Gaming Resort. This decline has been largely attributed to investor overreaction and concerns about new competition in Northern Virginia, which may not materialize soon.
Despite the initial slower-than-expected performance of the Rose Gaming Resort, Politzer anticipates improvement as operational issues are resolved and seasonal factors become more favorable. Additionally, Churchill Downs is expected to benefit from historical patterns of strong performance in the second quarter and the momentum of the Kentucky Derby. The company also has a strong capital expenditure cycle that has peaked, positioning it for significant deleveraging in the coming years. These factors combined suggest a favorable risk-reward scenario, justifying the Buy rating.