VICI Properties Stock Slump Presents Buying Opportunity, Says Analyst
VICI Properties (NYSE:VICI) gillyflower is away almost 10 percent o'er the past month. But that playground slide could pose investors with an chance to get involved with shares of the cassino landlord, according to 1 analyst.
In a take down to clients today, KeyBanc analyst Sir Alexander Robertus Todd Norman Mattoon Thomas upgrades the gaming real demesne investment trust (REIT) to “overweight” from “sector weight” with a $33 damage target. That implies upside of nearly 14 percent from the Oct. 5 close.
Figuring prominently inward the stock’s recent weakness is a alluvion of unexampled part issuance. Last month, VICI sold $3.6 1000000000 inward equity to fund antecedently announced plans. That dilutes stream investors, but the selloff is facilitating “a very attractive ledger entry point,” says Thomas.
In March, the existent land accompany partnered with private equity unfaltering Phoebus Apollo Global Management (NYSE:APO) to win Venetian, Palazzo and Sands Expo and Convention Center from Las Vegas Sands (NYSE:LVS) for $6.25 billion. VICI is shelling out $4 billion for the prop assets. The gaming REIT is directive proceeds from the September share sales agreement to finance that deal.
VICI Stock Still Attractive
While VICI is mired inward a slump, the Caesars Palace owner has a knack for savvy deal-making. Although it’s digesting multiple transactions today, it could remain a player for gaming and non-gaming tangible acres assets, according to KeyBanc’s Thomas.
While ontogeny cancelled a relatively larger [real estate] base makes it to a greater extent difficult, VICI’s appetence remains healthy, with the investment funds landscape painting ease mature for both gaming and non-gaming investments in the United States and abroad,” said the analyst.
As the recent sale of the Cosmopolitan confirms, appetence for Las Vegas gaming properties remains strong, and securities industry observers await that as the US gaming manufacture continues rebounding from the coronavirus pandemic, more regional casinos – of which VICI owns an extended portfolio — could impinge on the market.
In August, the gaming landlord said it’s acquiring rival MGM Growth Properties for $17.2 billion in stock. The transaction created the largest proprietor of Las Vegas Strip cassino existent estate. VICI is taking on $5.7 1000000000000 in MGP debt in that deal.
Future Upgrade for VICI
VICI currently owns the holding assets of 28 gaming venues with its tenant roster, including Caesars Entertainment, Century Casinos, and William Penn National Gaming, among others.
KeyBanc’s Seth Thomas notes the gaming REIT is “en route to obtain an [investment grade] rating from S&P inward the months ahead.” That could follow a catalyst for VICI stocks, because the landlord currently carries a “BB” rating — junk position — from S&P, though the outlook on that mark is “positive.” An improved credit grade could lour VICI’s financing costs if it issues debt in the future.
The stockpile yields 4.99 percent, or to a greater extent than twofold the dividend give in on the MSCI US Investable Market Real Estate 25/50 Index.