1Q19 Results. Adjusted EBITDAR of $562m (including $4m of high hold) came in 5-6% ahead of MSe $529m / cons $537m. Las Vegas EBITDAR of $360m ($356m hold-adj) came in above MSe/cons $334m with revenues beating by ~$20-25m, driven by a $5m hold benefit, RevPAR of 4.9% beating MSe +2.6% / cons +3.6% / MGM RevPAR +3.7%, and strong F&B / banquet business.
US Regional EBITDAR of $233m ($234m hold-adj) beat MSe $226m / cons $225m, partially supported by new sports betting states driving property-wide spend, as well as ramp at Centaur. All Other of $(31)m was in line with MSe $(31)m but below cons $(27)m. Mgmt did not provide formal 2019 guidance but reiterating commentary that it expects Las Vegas revenue growth should be similar or better to 2018 (2.5%). Mgmt also noted that 2Q18 benefitted from high hold and a record quarter at Caesars Palace, and 2Q19 would be impacted by the union wage re-negotiation. We had reflected this in our model but have chosen to take a more conservative approach now.
Updated Estimates. We raise our 2019e / 2020e EBITDAR forecasts to $2,420m / $2,580m from $2,414m / $2,577m due to the 1Q beat. The result gives us more confidence in 2019 estimate achievability following some choppy recent results. Our price target is unchanged at $11 (21% upside), based on an unchanged 8.4x multiple on our 2020e EBITDAR. With CZR trading at a ~1 turn discount vs. MGM, we continue to see an attractive valuation and reiterate Overweight. With new mgmt taking over this quarter and CZR conducting a strategic process, there could be additional catalysts ahead.