Century Casinos (NASDAQ:CNTY) shares slid alongside a broader consumer discretionary selloff on Tuesday despite a bullish review from JMP Securities.
The note, authored by equity analyst Jordan Bender, advised that the stock is selling at a deep discount to its peers despite its growing portfolio.
“CNTY is trading at a 38% discount to its regional gaming peers, but a sale of the Poland business and further expansion in the United States would support a valuation re-rate, in our view,” Bender advised.
He added that he remains confident in the company’s management as it integrates the Nugget Casino in Nevada and seeks additional partnerships in online gaming. Indeed, Bender advised there remains potential for further M&A fueled growth given the state of the company’s balance sheet.
“The market is over-penalizing in a downside scenario,” Bender concluded. “In the face of possible consumer softness, a potential slowdown in travel would benefit CNTY’s local business model, which offers a cheap form of entertainment close to home.”
As a result, even a downside scenario could provide a paradoxical benefit to Century City (CNTY), in his view. Bender initiated the stock at a Buy-equivalent rating and assigned a $15 price target to shares.
The stock slid 3.49% on Tuesday, taking shares to levels only slightly above half the target prescribed by JMP. Read more on B. Riley’s similar optimistic outlook for the stock.