What is the Star Casino share price really worth?

Analysts are pessimistic.

| More on:
Young man sitting at a table in front of a row of pokie machines staring intently at a laptop. looking at the Crown Resorts share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The share price of casino operator Star Entertainment Group Ltd (ASX: SGR) has been battered in 2024.

Shares are currently swapping hands at 25.5 cents per share, a far cry from the $4 per share range Star fetched pre-pandemic.

Significant regulatory and financial challenges are clouding the company's future. So there's no doubt that investors are wondering what the Star Casino share price is actually worth. Let's see what the experts think.

Star Casino share price under the pump

Much of Star's struggles can be traced to the regulatory crackdowns it is currently facing, which are compounded by a weakened financial performance.

Star has been grappling with a number of tension points since the release of the NSW Independent Casino Commission (NICC)'s Bell Two Inquiry into the casino operator.

The company was forced to suspend its shares from trading on the ASX for weeks while it reviewed the report – which called its integrity to hold a casino license into question – and its implications for company financials.

Findings and recommendations from the report have flowed on to have negative consequences to the Star Casino share price.

One bright spot was Star's agreement to sell the leasehold interest in its Treasury Brisbane Casino building for $67.5 million.

However, the company still needs an additional $240 million to stabilise its balance sheet. Plus, Queen's Wharf has been plagued by delays and cost blowouts.

Star also secured a $200 million debt facility to cover some of its short-term financial needs, but this comes with a hefty 13.5% interest rate. It's unclear if this will help the Star Casino share price.

Brokers are more and more cautious

Rather than seeing a potential bargin at these current levels, brokers are recommending investors steer clear of the company for now.

Barrenjoey is one broker who has issued a bleak outlook for Star Entertainment's Sydney casino.

In a report to clients, analyst Matt Ryan suggested that the Sydney casino property could be valued as low as $8 million, according to The Australian.

Critically, this doesn't include other assets on Star's books, including the Queen's Wharf site, which Ryan values at $1.05 billion.

Ryan also downgraded Star's stock to neutral, slashing its share price target from 65 cents to just 30 cents apiece. He said, per The Australian:

While we recognise that sales of the assets in the business could be worth significantly more, uncertainty in the near term outlook results in a change to our rating.

Meanwhile, Macquarie also downgraded the company's stock. It cited a "degradation" in earnings expectations for FY25 due to Star's current set of challenges.

There are many moving parts/challenges when considering Star Entertainment's earnings outlook with management's ability to execute the largest risk, particularly relating to cost-out and asset sales – likely beyond non-core.

Macquarie has reduced its price target for the Star Casino share price to just 24 cents per share.

Foolish takeaway

The Star Entertainment share price is under immense pressure as it wades through a number of challenges.

The stock is down more than 58% in the past 12 months, and there's no saying when the sell-off might end – or if it will. Time will tell.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Consumer Staples & Discretionary Shares

Happy couple doing online shopping.
Consumer Staples & Discretionary Shares

The best ASX retail shares to buy in FY26

Bell Potter thinks these shares could be top additions to an investment portfolio in the new financial year.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Consumer Staples & Discretionary Shares

Woolworths shares slip amid $100 million cost closure news

Woolworths announced a closure that’s expected to cost the supermarket giant some $100 million.

Read more »

A happy young woman in a red t-shirt hold up two delicious burritos.
Opinions

Bull vs. Bear: Guzman Y Gomez shares

Guzman Y Gomez shares peaked at $45.99 in February and closed at $28.04 yesterday. Where to now?

Read more »

Woman customer and grocery shopping cart in supermarket store, retail outlet or mall shop. Female shopper pushing trolley in shelf aisle to buy discount groceries, sale goods and brand offers.
Consumer Staples & Discretionary Shares

With a projected 7% dividend yield in FY29, is the Coles share price a buy?

Should this supermarket stock go in the shopping basket for passive income?

Read more »

kid with headphones using an electronic device with man looking at it
Consumer Staples & Discretionary Shares

Kogan shares just hit a 52-week low – is it time to buy?

Bargain hunters might want to monitor this ASX 300 company

Read more »

Young fruit picker clipping bunch of grapes in vineyard.
Broker Notes

How much upside does Macquarie see for Treasury Wine shares?

Macquarie has a neutral view on Treasury Wine shares, with an $8.50 price target and 11% upside.

Read more »

A man stands with his arms folded in front of banks of unused poker machines in a darkened gaming room.
Share Market News

Broker tipping 50% upside for this consumer discretionary company

This ASX 200 company could be set for a rebound

Read more »

Couple look at a bottle of wine while trying to decide what to buy.
Consumer Staples & Discretionary Shares

Is Treasury Wine ripe for a turnaround?

With China’s door once again open for Australian wine importers, Treasury Wine’s fortunes are improving.

Read more »