VICI Properties (VICI) was trading lower as Mizuho Securities cut its recommendation on the stock over issues related to the tenant Caesars, slowing acquisition volume, and a lack of catalysts.
Shares were 2.18% down to $28.67 during Wednesday morning trading.
“Caesars (CZR) is VICI’s largest tenant (39%) with two master leases: Las Vegas (2 assets) and Regional (15 assets). While Las Vegas coverage appears healthy, regional assets remain pressured,” said analysts Haendel St. Juste and Ravi Vaidya.
“We do not expect VICI to execute on sale lease-back opportunities for additional casinos, even if Caesars markets assets, to not increase tenant concentration,” said the research note.
Slowing acquisition volume implies limited growth or visibility, according to St. Juste and Vaidya.
“VICI currently trades ~12x, ~2-turns below the triple net average and ~8-turns below REITs overall. However, VICI’s current FY2 estimated AFFO per share guidance reflects 2.3% growth, 180 basis points below peers, and there is a lack of catalysts that could support relative outperformance going forward,” said the note.
Mizuho downgraded the stock to Neutral from Outperform, but maintained the price target at $30.00.
The Japanese investment bank’s rating differs from the average sell-side analysts and Seeking Alpha authors rating of Buy. SA’s Quant Rating system sees the stock as Strong Buy.