The 2026 tale of woe for Full House Resorts (NASDAQ: FLL) continued Monday as the already battered casino stock dipped modestly after Texas Capital downgraded the shares.
In a new report to clients, analyst David Bain lowered his rating on the regional casino operator to “hold” from “buy” while paring his price target to $1 from $3.50. The revised forecast implies upside of 20.4% from current levels. The analyst cites “volatile high-yield market conditions and ongoing debt restructuring negotiations” as reasons for the downgrade.
“Despite structurally favorable equity risk/reward metrics following year-to-date compression, final term uncertainties surrounding a planned private debt offering and permanent casino funding (for American Place in Waukegan, Ill.) prompt a sideline stance,” notes Bain.
The analyst expects Full House will report third-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) of $14.1 million, below the consensus estimate of $15.8 million.
Full House May Have Funding for American Place
One of the drags on Full House stock has been the operator’s ability (or inability) to secure final financing for the permanent American Place Casino, but Bain believes the company has accomplished that objective.
“We believe FLL has likely secured permanent financing for American Place, potentially utilizing a REIT sale-leaseback structure,” says the analyst. “If executed, recent market transaction multiples for regional gaming operators (OpCos) suggest substantial equity valuation upside.”
The analyst didn’t speculate as to which real estate investment trust (REIT) Full House may have struck a deal with on American Place’s property nor did he mention a possible sale price of the land. Even if such a transaction has been reached, Full House still faces headwinds from the high-yield debt market.
“However, refinancing discussions with existing credit facilities remain fluid and incomplete,” adds Bain. “Given a contraction in the broader high-yield market and a lack of near-term visibility on final credit terms, we prefer to wait for greater capital structure clarity despite potentially compelling asymmetric upside.”
Cutting Costs in Colorado
In addition to American Place, Full House’s other marquee venue is the Chamonix Casino Hotel in Cripple Creek, Colo. — a property that’s had some issues since opening in December 2023.
Full House is engaging in what Bain describes as “aggressive” cost cuts at the Colorado regional casino. Those efforts may hinder third-quarter results, but could set Chamonix up for better results moving forward.
“While these sweeping cost-mitigation efforts caused localized operational disruptions that may weigh on 3Q26 estimates, they effectively de-risk the expense baseline moving forward,” concludes the analyst. “Consequently, we expect the full run-rate benefit of these reductions to manifest more cleanly in 4Q26, establishing a leaner, more resilient margin profile heading into 2027E.”
Source link
