Monarch Casino Focuses On Strengthening Atlantis Reno

Posted on: April 19, 2022, 12:25 p.m.

Last update: April 19, 2022, 01:04 a.m.

After shelling out $400 million to upgrade its namesake site in Black Hawk, Colorado, Monarch Casino & Resort (NASDAQ:MCRI) is once again turning its attention to the Atlantis Casino Resort Spa – the operator’s site in its home market of Reno.

Monarch Casino
Atlantis from Monarch Casino in Reno. The company is in the process of renovating this place to attract more affluent customers. (Picture: YouTube)

While Monarch’s spending in Colorado has clear upsides, including a rapidly growing population and recently lifted limits on table games, there are also potential upsides to reasserting itself in Reno. The operator is about to complete renovations to the 27-story Concierge Tower at Atlantis – a move aimed at attracting a more affluent clientele. Investments in Reno could pay off for Monarch, as some analysts see resilience in the northern Nevada gambling hub.

We expect MCRI’s Atlantis property to have proven more resilient than expected through February, with initial March data suggesting regional gaming consumer improvement after Omicron,” Stifel analyst Jeffrey Stantial said in a recent note.

It rates Monarch shares as a “buy,” with a price target of $96, down from $91 previously. Up 17.57% year-to-date, the stock is easily one of the best performing domestic gaming stocks in 2022.

For Monarch, Reno Allure

While the Reno/Lake Tahoe/Sparks market lacks the glitz and revenue of Las Vegas, the former still offers attractive points for traders.

These include a growing population and businesses opening new offices in the area. Recent headlines suggest game companies are taking notice. Circa Sports will open a retail sports betting store in Sparks in a few months, and Century Casinos (NASDAQ:CNTY) announced in February that it was acquiring Nugget Sparks to enter Nevada.

Monarch CEO John Farahi says Reno Gazette-Journal that Reno is an increasingly “sophisticated” market that justifies high-end offerings. In this sense, the company is renovating the first tower of Atlantis, which is more than three decades old.

Currently, Monarch only owns Atlantis and the aforementioned Colorado site – the latter being the most profitable of the pair. However, the company is regularly mentioned as a potential player in regional casino consolidation activity.

More Reno catalysts

Reno is a market with potential catalysts, including the return of convention business and more gamblers in the coveted 55-plus demographic returning to casinos post-pandemic.

“At Reno-Sparks, we believe market-wide performance has proven more resilient than expected thanks to Omicron, with February GGR up a considerable +35% from 2/2019. Although the Nevada has yet to report its March numbers, we expect demand will likely remain robust as the broader U.S. regional market accelerates in March,” adds Stifel’s Stantial.

That complements strength in Colorado, where Stantial sees Monarch potentially boost first-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates by 8%, thanks to large-scale marketing efforts that are only dated two months.