Following the company’s impressive Q2 earnings report, Bank of America has upgraded U.S. regional casino operator Boyd Gaming Corporation BYD 0.36% from Underperform to Neutral. In a new report, analyst Shaun Kelley explained why the firm now sees stability returning to Boyd’s business.

Fundamental Recovery

According to Kelley, Boyd’s 3.5 percent gross gaming revenue (GGR) growth in Q2, along with the company’s effective cost-cutting measures, was the driving force behind its Q2 EBITDA beat. Bank of America had predicted that Q2 would be a strong quarter for U.S. regional operators Boyd, Gaming and Leisure Properties Inc GLPI 0.6%,Pinnacle Entertainment, Inc PNK 0.49% and Penn National Gaming, Inc PENN 1.61%, and so far, the results have confirmed that prediction.

In addition to the company’s top-line growth, Kelley also pointed out Boyd’s 6.2x net debt/EBITDA ratio, financial leverage that can magnify equity returns.

Challenges

Despite the improving environment, Bank of America still sees…

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