Susquehanna cuts Caesars to Negative, sees underperformance persisting

Susquehanna analyst Joseph Stauff downgraded Caesars Entertainment (CZR) to Negative from Neutral with a price target of $33, down from $44. The analyst believes the stock’s underperformance versus MGM Resorts (MGM) is very likely to continue. The firm views Caesars’ portfolio as “notably disadvantaged” versus MGM given its “lower-end customer base and lower-quality assets,” especially considering investor concerns of weakness at the lower-end of customer demand. Caesars’ investments in its regional and digital segments over the past few years have limited its ability to reinvest in its Las Vegas business while MGM has accelerated its investment, the analyst tells investors in a research note. Susquehanna adds that Q2 regional data suggest a “growing disparity in growth” between Caesars and peers.