Here’s why Boyd Gaming stock is on the move

Is the casino stock a buy?

Boyd Gaming (NYSE:BYD) stock jumped more than 3% on Monday, fueled by a move to sell its stake in online sports betting leader FanDuel.

The casino operator, which owns 28 casinos in 10 states including several in Las Vegas, announced late last week that it was selling its 5% stake in FanDuel to FanDuel’s parent Flutter Entertainment (NASDAQ:FLUT).

The deal, which is expected to close in the third quarter, is for $1.755 billion. The proceeds would be used mainly to pay down some of the company’s $3.5 billion in debt.

“This transaction unlocks the tremendous unrealized value that our investment in FanDuel has created for our company,” Keith Smith, president and CEO of Boyd, said. “As a result, we are in a significantly stronger financial position to continue executing our strategy of investing in our properties, pursuing growth opportunities, returning capital to our shareholders, and maintaining a strong balance sheet.”

The FanDuel partnership had fueled strong revenue growth for Boyd. In the first quarter, Boyd’s online segment grew revenue 16% to about $170 million.

“On top of the continued growth we are delivering in our Online segment, our 5% equity stake in FanDuel represents significant and growing value for our shareholders, as FanDuel further strengthens its position as the nation’s leading online gaming company,” Smith said back in April during the first quarter earnings call.

But the transaction also includes a new market-access agreement with Flutter and FanDuel that could help Boyd continue to tap into that growth.

New agreement with FanDuel

As part of their new deal with FanDuel, which runs through 2038, Boyd will get a fixed fee per state to offer FanDuel in the states where it has casinos, including Iowa, Indiana, Kansas, Louisiana, and Pennsylvania. FanDuel will also continue to operate Boyd’s retail sportsbooks outside of Nevada through mid-2026, after which time Boyd will assume operations. Further, Boyd will maintain its Boyd sports betting app in Nevada.

After the deal closes, the company expects its online segment to generate $50 million to $55 million in operating income for the full year 2025 and approximately $30 million in 2026.

“FanDuel has emerged as the nation’s clear leader in online sports-betting, while Boyd has been able to leverage this partnership to profitably participate in the rapid growth of sports betting across the country,” Smith said of the deal. “It has been a privilege to work with the Flutter and FanDuel teams, and we look forward to supporting FanDuel’s continued growth and success through our market-access agreements across the country.”

Analysts boost Boyd’s price target

The stock price spiked on Monday after the market had a day to digest the impact of the deal for Boyd Gaming. Investors may have been influenced by some analyst upgrades on Friday.

Morgan Stanley boosted Boyd’s price target by $4 to $80 per share, adding that the value of the assets acquired could provide a temporary boost for U.S. gaming assets. This is because the market may ascribe similar multiples to other transactions.

In addition, Stifel raised its price target to $87 per share, from $76 per share, after the deal was announced.  

Susquehanna gave Boyd stock a similar boost, raising the price target to $87 per share from $76. By using the proceeds to reduce its debt, Susquehanna analysts estimate the company will save $85 million in interest expenses.

Boyd Gaming is currently trading at $82.35 per share. It has a median price target of $85 per share, which would represent a 3% return over the next 12 months. The $87 per share target set by two of the analysts suggests about a 6% return.

The stock is pretty cheap, trading at 13 times earnings and 11 times forward earnings. There is nothing here screaming buy, but Boyd reports Q2 earnings on July 24, so investors may want to wait for that to get some more visibility.