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Deutsche Not Expecting Surprises From Red Rock Resorts' Q2

Deutsche Bank isn't expecting any surprises from Red Rock Resorts Inc RRR 0.14% when the company reports its first quarterly results as a publicly traded equity on August 15.

Street expects the company to earn $0.37 a share for the second quarter on revenue of $349.99 million.

"We expect little in the way of surprises and we maintain a positive bias into the quarter," Carlo Santarelli wrote in a note.

Santarelli, who has a Buy rating and $25 price target on the stock, projects EPS of $0.31 for the second quarter.

The analyst said Boyd Gaming Corporation's BYD 3.25% second quarter results bodes favorably for Red Rock. Boyd Gaming's LV locals net revenue as a percentage of LV locals reported GGR declined about 40 bps year-over-year.

"We believe RRR LV locals casino revenue at least kept pace with market trends (exposure to North LV should help), implying a result of >2.8% and note that our current forecast calls for 2.9% segment net revenue growth," the analyst continued.

The analyst's LV locals EBITDA estimate of $110.4 million compares to consensus EBITDA of $109.2 million and are currently forecasting LV locals EBITDA flow through of about 85 percent in the second quarter and estimate quarterly margin expansion of 150 bps.

The analyst also forecast solid RevPAR growth, driven by what he believes was a healthy book of group business.

"While we believe BYD's headline locals EBITDA result, which was in-line with Consensus, lowered the bar a bit for RRR, we still expect an in-line to modestly better print, driven primarily by margin strength," Santarelli added.

At time of writing, shares of Red Rock were flat at $22.11.

DateFirmActionFromTo
May 2016CitigroupInitiates Coverage onBuy
May 2016JP MorganInitiates Coverage onOverweight
May 2016Wells FargoInitiates Coverage onOutperform

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