{"id":85252,"date":"2024-09-30T20:54:21","date_gmt":"2024-09-30T20:54:21","guid":{"rendered":"https:\/\/neclink.com\/index.php\/2024\/09\/30\/churchill-downs-could-be-boosted-by-new-derby-projects\/"},"modified":"2024-09-30T20:54:21","modified_gmt":"2024-09-30T20:54:21","slug":"churchill-downs-could-be-boosted-by-new-derby-projects","status":"publish","type":"post","link":"https:\/\/neclink.com\/index.php\/2024\/09\/30\/churchill-downs-could-be-boosted-by-new-derby-projects\/","title":{"rendered":"Churchill Downs Could Be Boosted by New Derby Projects"},"content":{"rendered":"


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\n Posted on: September 30, 2024, 03:44h.\u00a0\n <\/p>\n

\n Last updated on: September 30, 2024, 03:44h.\n <\/p>\n

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Shares of Churchill Downs (NASDAQ: CHDN) could get a lift from the operator\u2019s plans to continue improving its namesake Kentucky racetrack in advance of the Kentucky Derby next May.<\/p>\n

\"Churchill
Mystik Dan winning the Kentucky Derby in May. An analyst is bullish on Churchill Downs\u2019 expansion plans at the Kentucky track. (Image: ESPN)<\/em><\/figcaption><\/figure>\n

Truist Securities analyst Barry Jonas recently met with Churchill executives at the storied track and came away constructive on the potential impact of enhancements. He has a \u201cbuy\u201d rating on the stock and has a $166 price target on it, which implies upside of about 20% from current levels. The gaming company is planning to spend $80 to $90 million to renovate the grandstand at its eponymous Kentucky racetrack.<\/p>\n

The announcement was made in conjunction with the gaming company\u2019s second-quarter earnings<\/a> release and the operator expects those improvements will be finalized prior to the 2025 edition of the Derby. Jonas estimates a full return on investment will be realized in eight years.<\/p>\n

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We see multiple opportunities for additional value enhancing projects at [the track], given what we see as sizable consumer demand and opportunities to increase spend (and value) per Derby attendee,\u201d observed the analyst.<\/p>\n<\/blockquote>\n

Churchill is committing to new amenities<\/a> at the iconic Kentucky track as an avenue for supporting the broader suite of Derby Week festivities and races. In 2023, handle for Derby Week and the Derby itself topped records.<\/p>\n

Derby Still Prime Catalyst for Churchill Downs Stock<\/h2>\n

In his note, Jonas called the Kentucky Derby \u201cthe crown jewel of the portfolio\u201d for Churchill Downs and that assessment is accurate because ticket sales alone account for 60% of the operator\u2019s Derby Week revenue. The analyst said the gaming company has more room to continue improving the track via capital expenditures.<\/p>\n

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That\u2019s pivotal because prior enhancements<\/a> at the track already paid off. The Derby is one of the most in-demand live sporting events in the US as highlighted by the fact demand for premium seating continues to outpace supply, according to Churchill management. A third of ticket sales for \u201crun for the roses\u201d are tied to three- to seven-year contracts that buyers cannot cancel. The other two-thirds are sold in advance of the race.<\/p>\n<\/div>\n

As for Churchill\u2019s TwinSpires, which broke Derby records last year as well, Jonas called it \u201cslow, steady, and resilient,\u201d noting it\u2019s benefiting from horseracing deals with DraftKings and FanDuel.<\/strong><\/p>\n

In addition to its portfolio of racetracks, Churchill Downs operates 12 regional casinos across 10 states, and historical horse racing (HHR) facilities in Kentucky, Virginia, and shortly, New\u00a0Hampshire. Jonas noted that the stock trades at a premium to others in coverage universe, but cautioned that Churchill isn\u2019t directly comparable to traditional regional casino operators.<\/p>\n

Derby City Can Find its Footing<\/h2>\n

Jonas also noted that the slow start for Derby City Gaming<\/a> isn\u2019t overly concerning. The $90 million historical horse racing (HHR) venue opened last December in downtown Louisville and has been somewhat sluggish, but that\u2019s not causing management to fret.<\/p>\n

Churchill executives are \u201c\u201cunconcerned with the modest ramp, pointing to Newport and Turfway as examples of other successful properties that got off to a slow start before improving,\u201d observed the analyst.<\/strong><\/p>\n

Jonas added that expansion of Churchill\u2019s HHR facility in Owensboro, Ky. is on pace to be completed and open early next year.<\/p>\n<\/div>\n


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