Earlier this week, Jefferies Equity Research wrapped up its Nantucket Consumer Conference, held June 17 and 18. Discussion was effectively dominated by gaming stocks. Twenty gaming, leisure, and lodging companies were represented.

Conferees “noted the ongoing conflict of demand and pricing strength with limited conviction in sustainability,” wrote Jefferies analyst David Katz. He said the group supported his view that “specific visibility is required” for long-term stock performance, citing Churchill Downs, DraftKings, and Rush Street Interactive as exemplars.

Although the leisure outlook was described as “mixed,” gaming companies are performing generally in line with Wall Street expectations. This includes Caesars Entertainment, Penn Entertainment, and Light & Wonder.

Casino management teams “projected confidence in near-term business trends in both Las Vegas and regionals with no growing evidence of consumer weakness.” Takeaways included the view that Las Vegas’s fundamental strength was exceptional, with particular optimism exuded by Caesars leadership.

Katz took the position that regional gambling “is what it is,” noting stable underlying trends and a solid second quarter for Caesars, Churchill Downs, and Penn. Debate on Penn’s controversial digital strategy is, however, ongoing: “Our view is that some change is inevitable.”

Digital gambling in general was “the most obvious bullish call and remains our favorite group.” The standout was DraftKings, particularly the confidence expressed by its top brass. Katz opined that “its market-share positioning and product acceleration in a more stable-than-feared tax landscape implies continued rising estimates and cash generation.”

He also had kind words for Rush Street: disciplined and focused on areas in which it can excel. Katz also noted a growing focus on tech providers like SportRadar “as strategies become clearer and more relevant with arrival of in-game wagering.”

MGM Resorts International partner Marriott was one of the lodging companies described as “experiencing moderation in leisure demand, strength in group business, and uneven recovery of business transient that is market-dependent.” Its management was among those expressing bullish sentiments, despite volatility in revenue per available room.

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