Caesars Entertainment (NASDAQ: CZR) faced a challenging start to 2025, with shares dropping 2.48% after CFRA Research reaffirmed its "sell" rating and reduced the price target from $35 to $27.

CFRA analyst Zachary Warring cites concerns about Caesars' heavily leveraged balance sheet and anticipates challenging year-over-year comparisons throughout 2025. The firm maintains its earnings per share (EPS) estimates of -$0.05 for 2024 and $0.75 for 2025.

Key Concerns:

• High debt burden relative to industry peers
• Trailing-12-month EBIT/interest expense ratio at 1.0x
• Potential need for additional asset sales to reduce debt

Recent Asset Sales:

• WSOP sold to NSUS Group Inc. for $500 million
• LINQ Promenade sold to TPG Real Estate and Acadia Realty Trust for $275 million

Future Outlook:

• Possible spinoff of digital operations, including Caesars Sportsbook
• Company remains open to divesting non-core assets
• Fourth-quarter results scheduled for February 25, 2025

Despite recent expansion, including the new Caesars Virginia casino in Danville, analysts suggest the company may need to continue selling assets to address its debt situation. The Virginia property represents a joint venture with the Eastern Band of Cherokee Indians (EBCI).

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