GDEN - Golden Entertainment is called a casino stock standout by CBRE Equity Research

CBRE Equity Research resumed coverage on Las Vegas locals gaming stocks.

Analyst John DeCree and team said they are bullish on the long-term secular growth trend in the Las Vegas Locals market on an overall basis. Their confidence is said to be supported by significant population migration to Vegas, particularly among higher-income demographics, and a rapidly diversifying economy no longer solely reliant on the Las Vegas Strip.

Despite those positive factors, the growing risk of a U.S. recession, rising interest rates, and difficult FY23 comparisons in the Las Vegas Locals market keep CBRE cautious generally in the near term.

Digging through the group, CBRE recommends Golden Entertainment ( NASDAQ: GDEN ), which earns a Buy rating for its particularly dislocated valuation, under-levered balance sheet, and upside earnings potential for The Strat given the robust event calendar in Las Vegas for FY23 and FY24.

"Moreover, GDEN has unique financial flexibility following the sale of Rocky Gap and could begin returning significant capital to shareholders in the form of buybacks and dividends, which given the company's limited capital base, should translate to meaningful value."

In addition, CBRE thinks the company would be an ideal acquisition target for a more scaled strategic gaming operator.

A price target of $58 is set on GDEN to rep more than 40% upside.

Meanwhile, CBRE started off coverage on Red Rock Resorts ( RRR ) and Boyd Gaming Corporation ( BYD ) with Hold ratings.

Compare growth, profitability and valuation metrics on GDEN, RRR and BYD side by side.

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