We’re assuming coverage with Peer Perform ratings on each of the Big 3 cruise lines (Royal and Norwegian previously outperform rated). While valuations across the sector appear attractive, our checks suggest that North American / UK-sourced booking activity has continued to weaken amid the increasingly globalized spread of coronavirus, and we would rather wait for tangible signs of stabilization before getting more positive on the sector, even if it means we miss out on the early stages of a stock recovery.
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In this week’s piece we examine risk metrics for our coverage following last week’s severe selloff. Specifically, we show current debt maturities by year, current undrawn borrowing capacity, and current leverage for each company in our coverage. We then show how current credit spreads for a couple metrics compare to historical levels. For historical context we also show how much revenue declined in prior recessions for the sub-industries within our coverage, for GGR, RevPAR, timeshare contract sales, and cruise net yields, though it seems the impact from coronavirus is likely to be felt differently depending on how this evolves.
In this week’s piece we discuss a few charts from the week. Specifically, we’ll discuss 1) the trend in daily new coronavirus cases and “coronavirus” Google searches; 2) how cruise stocks have historically traded after prior exogenous events as a guide for coronavirus; and 3) why CHH’s high relative valuation to HLT and MAR does not seem justified to us.
The impact from coronavirus remains fluid, and the earnings impact to cruise lines has gotten increasingly worse since we last updated estimates for CCL and RCL. As a result, today we update our CCL and RCL models to stay consistent with our update of NCLH after their earnings report yesterday.
This morning (02/20/20) NCLH reported 4Q EPS ex-items of $0.73, versus the prior guide of ~$0.69, consensus of $0.70 and our $0.71 estimate.
In this week’s piece we discuss and attempt to quantify the sports betting and iGaming opportunity for ERI/CZR. We examine and explain ERI’s relationship with William Hill and how that affects the ultimate sports betting earnings potential. And we explore the potential value ERI/CZR could create for shareholders by spinning off the sports betting and iGaming segments, especially considering recent market performance from PENN after the Barstool transaction as well as DEAC with DraftKings going public.
In this week’s piece we highlight a few charts from events in the week. Specifically, we’ll discuss 1) how our group has traded since the coronavirus outbreak; 2) our thoughts on PENN’s recent stock performance, and what the market seems to be implying with its new Barstool relationship – we show a DCF of the contribution; 3) WYNN’s cash burn during the Macau casino closure, and math with the EBITDA impact; and 4) the impact of possible RRR land monetization, as well as a bridge to EBITDA in 2020.
RCL reported 4Q this AM (2/4/20). EPS was $1.42 vs. consensus of $1.42 and our $1.43. The quarter was fine to us. Investor focus was on the 2020 outlook.
In this week’s piece we lower estimates on coronavirus for those with relevant exposure to China, and we also update estimates for other reasons, which we’ll discuss. We also discuss January Macau GGR in relation to Chinese New Year visitation, as well as recent U.S. hotel forward booking data, unit growth, and pipeline data.
In this week’s piece we discuss some topics from the week, including 1) poor stock performance driven by coronavirus, including many stocks who have limited exposure to China; 2) a new CFO at PENN; and 3) an update on the timing of Japan gaming and how investors don’t seem very focused on the Japan opportunity, currently.
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