Analysts remain bullish on Red Rock Resorts ahead of its third quarter earnings release that’s expected to be affected by the summer heat and slower demand, while touting the company’s future plans for building new resorts in south Las Vegas after the success of the Durango Casino & Resort that is nearing its first anniversary.

Joseph Greff with J.P. Morgan said for the third quarter the firm is lowering its EBITDA forecast to $185.3 million, down from $190.9 million, which compares with consensus $187 million to “reflect the impact of the extreme heat in the summer and a slight moderation of market-wide demand trends.”

For the fourth quarter, J.P. Morgan is lowering its EBITDA estimate to $202.8 million, down from $214.5 million, which compares with consensus $213 million. In 2025, J.P. Morgan projects $816 million, down from $836 million, and “below what seems to us an aggressive consensus estimate of $847 million,” Greff said in a note to investors.

Given these estimate tweaks, Greff said their year-end 2025 price target goes to $59, down from $69. The stock closed at $52.26 on Friday.

“We maintain our overweight rating and think that Red Rock Resort’s sole market – the Las Vegas locals market – is an attractive one with continued population growth, an improving mix of higher-income earners, and a development land bank with beltway access in high population growth and high-income communities with limited or no gaming competition that should serve to provide Red Rock with an appealing development-driven EBITDA (annual growth rate) profile over the next decade.”

That development pipeline was highlighted in a separate note issued by Carlo Santarelli, an analyst with Deutsche Bank. The firm hosted a dinner with the management team at Red Rock Resorts during the Global Gaming Expo in which it talked with executives about future projects.

“We believe the cadence of the pipeline has changed a bit, relative to prior commentary, with the key change being what we believe to be the de-prioritization of Skye Canyon (in northwest Las Vegas), and the advancement of Cactus (Avenue project on South Las Vegas Boulevard near the South Point Hotel Casino), within the pipeline chronology. We believe the primary drivers of the pecking order relate to population growth in the local zones around the development, as well as to a lesser extent, the experience from Durango related to the cannibalization circles.”

Santarelli said Red Rock management is weighing development on the 128-acre Cactus Avenue site, which he believes would be a development akin to Red Rock Resort in Summerlin in scope. He noted that the second phase of Durango with a parking and gaming floor expansion is getting underway.

Santarelli also noted a development on the 49-acre Inspirada site in west Henderson near the M Resort, which would be a smaller scale development about 60 percent of Durango and catering to the highly affluent subdivision of nearby Anthem.

“While we view Cactus and Durango Phase II as a toss up at this stage, with respect to what is next, we believe Cactus has moved ahead of Inspirada in terms of management’s thinking,” Santarelli said.

In 2025, Red Rock will work through the parking and high-limit gaming projects at Durango, which will have a modest effect on performance. It also will embark on a full room remodel at Green Valley Ranch, Santarelli said.

“In terms of valuation, we continue to value the pipeline from a per-acre real estate value perspective,” Santarelli said. “For longer-term oriented investors, we would note that this valuation methodology understates the equity value inherent in the likely development returns. As such, as the development pipeline cadence and time line further crystallize, we would expect valuation to improve, relative to the current real estate embedded value methodology.”

Santarelli said that given the calendar influence and accounting over July and August, they think the third quarter results are more indicative of the underlying cadence in the locals’ market. He said the 3.3 percent quarter-to-date growth is a reasonable proxy, with Durango providing the bulk of the market growth.

“This would imply same-store quarter-to-date results are down low-to-mid-single digits year-over year consistent with our views,” Santarelli said. “Broadly speaking, we believe the higher end continues to drive the market growth, which bodes well for Red Rock Resorts, while the lower end remains consistent but weaker than the high end with respect to the growth trajectory.”

From an earnings’ perspective, Santarelli said they remain comfortable with their third-quarter forecasts but note that their estimates are below consensus.