Texas Capital stays bullish on Monarch Casino & Resort with M&A a potential catalyst

What happened

Texas Capital kept a Buy rating on Monarch Casino & Resort after third-quarter results narrowly missed revenue and profit estimates. Analyst David Bain said Reno and Black Hawk trends look stable. Monarch repurchased $37M of stock, its largest quarterly buyback ever, and gave no formal M&A update.

Confirmed

Global impact / market context

The buyback of $37M returns cash to shareholders, which can support the stock price. The analyst sees buying a third casino resort as the main driver that could lift the valuation, while also calling shares undervalued without any deal.

Analyst inference

The stock fell 1.1% before the open to $114.00, below its 52-week high of $135.93, showing investors focused on the earnings miss. The $147 price target implies the analyst expects a recovery led by stable local markets or an acquisition.

Analyst inference

What to watch

1. Watch whether Monarch announces a third casino resort acquisition, since management said it is evaluating potential transactions but gave no formal update beyond that. Confirmed
2. Track future quarterly buyback amounts to see if the $37M repurchase is repeated, which would show continued cash returns to shareholders. Proposed
3. Monitor Reno and Black Hawk gaming reports for signs that Monarch keeps its fair-share market premium, since the analyst relied on those state reports rather than company segment data. Analyst inference

Evidence

• seekingalpha.com