NEW YORK (TheStreet) -- Shares of Boyd Gaming Corp. (BYD) are lower by 3.95% to $10.95 in pre-market trading on Wednesday, following a ratings downgrade to "equal-weight" from "overweight" at Morgan Stanley (MS) .
The firm said it lowered its rating on the casino gaming company as it is expecting a slower ramp in domestic online gaming growth.
Morgan Stanley cut its price target on Boyd Gaming to $11 from $12.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Separately, TheStreet Ratings team rates BOYD GAMING CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate BOYD GAMING CORP (BYD) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and generally higher debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BOYD GAMING CORP has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, BOYD GAMING CORP continued to lose money by earning -$0.87 versus -$10.30 in the prior year. This year, the market expects an improvement in earnings (-$0.04 versus -$0.87).
- Net operating cash flow has slightly increased to $81.16 million or 7.48% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.13%.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.6%. Since the same quarter one year prior, revenues slightly dropped by 2.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Although BYD's debt-to-equity ratio of 9.03 is very high, it is currently less than that of the industry average. To add to this, BYD has a quick ratio of 0.57, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 94.2% when compared to the same quarter one year ago, falling from $11.63 million to $0.67 million.
- You can view the full analysis from the report here: BYD Ratings Report
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