VICI Properties Stock Slump Presents Buying Opportunity, Says Analyst

VICI Properties (NYSE:VICI) stockpile is away almost 10 percent over the past times month. But that sliding board could represent investors with an chance to catch mired with shares of the gambling casino landlord, according to I analyst.

In a promissory note to clients today, KeyBanc analyst Sir Alexander Robertus Todd Saint Thomas upgrades the gaming real acres investiture cartel (REIT) to “overweight” from “sector weight” with a $33 price target. That implies upside of nearly 14 percent from the Oct. 5 close.

Figuring conspicuously in the stock’s recent weakness is a overflow of unexampled apportion issuance. Last month, VICI sold $3.6 1000000000 in equity to fund previously proclaimed plans. That dilutes stream investors, but the selloff is facilitating “a rattling attractive accounting entry point,” says Thomas.

In March, the real demesne society partnered with private equity unbendable 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 holding assets. The gaming REIT is guiding proceeds from the September deal sales agreement to finance that deal.

VICI Stock Still Attractive

While VICI is mired inwards a slump, the Caesars Palace proprietor has a knack for a savvy deal-making. Although it’s digesting multiple transactions today, it could remain a participant for gaming and non-gaming tangible demesne assets, according to KeyBanc’s Thomas.

While growing away a comparatively larger [real estate] stand makes it to a greater extent difficult, VICI’s appetency remains healthy, with the investiture landscape painting allay mature for both gaming and non-gaming investments inwards the United States and abroad,” said the analyst.

As the recent sale of the Cosmopolitan confirms, appetency for Las Vegas gaming properties remains strong, and marketplace observers expect that as the US gaming industry continues rebounding from the coronavirus pandemic, to a greater extent regional casinos – of which VICI owns an extensive portfolio — could hit the market.

In August, the gaming landlord said it’s getting competitor MGM Growth Properties for $17.2 billion inwards stock. The transaction created the largest proprietor of Las Vegas Strip gambling casino tangible estate. VICI is taking on $5.7 one million million in MGP debt inwards that deal.

Another Upgrade Coming for VICI?

VICI currently owns the holding assets of 28 gaming venues with its renter roster, including Caesars Entertainment, Century Casinos, and William Penn National Gaming, among others.

KeyBanc’s Lowell Jackson 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 accelerator for VICI stocks, because the landloard currently carries a “BB” rating — junk status — from S&P, though the outlook on that mark is “positive.” An improved credit entry tier could take down VICI’s funding costs if it issues debt inward the future.

The carry yields 4.99 percent, or to a greater extent than threefold the dividend give in on the MSCI US Investable Market Real Estate 25/50 Index.