Red Rock Resorts Gets Analyst Support

Red Rock Resorts (NASDAQ: RRR) faced a reaction from investors following its third-quarter earnings report. Shares of the Sunset Station operator fell 5.2% in after-hours trading. The company reported a loss of 17 cents per share for the third quarter and revenue of $488.7 million. Analysts had expected earnings of 44 cents per share and revenue of $478 million.

The $430 million spending on Durango Casino & Resort, southwest of Las Vegas, being higher than expected may be worrying investors. Management, however, argues that this investment will pay off in the long run. Truist Securities analyst Barry Jonas noted that the Durango North budget rose from $385 million to $430 million due to an expanded scope, that the opening is targeted for the third quarter of 2027, and that the 20% return on investment target has been maintained. The company's 2026 capital expenditure was raised to a range of $550 million to $575 million.

Stifel analyst Steven Wieczynski says the selloff in the shares is not meaningful. Wieczynski highlights Red Rock's reliance on the local Las Vegas market and its large land bank, which give the company growth options. The analyst, who says the Strip has been struggling while operators focused on the local market and investing in their properties are gaining share, issued a buy rating on the stock with a $70 price target. This target implies an upside of more than 44% from the current level.

New project announcements may also be an important catalyst for the stock. According to Jonas, management is continuing scope and pricing work on the next major project, including Cactus and Inspirada, and plans to make an announcement soon. Work is also underway on a hotel expansion of about 400 rooms at Durango, along with additional meeting space and a spa. The Tavern business is also reported to be progressing strongly, with 60% of customers not previously members of the loyalty program.