Caesars Entertainment (NASDAQ: CZR) faced a challenging start to 2025, with shares dropping 2.48% after CFRA Research reiterated its "sell" rating and reduced the price target from $35 to $27, suggesting a potential 17.1% downside from the current $32.59 closing price.

CFRA analyst Zachary Warring maintains 2024 and 2025 earnings per share estimates at -$0.05 and $0.75, respectively. The analysis highlights concerns about Caesars' over-leveraged balance sheet and challenging year-over-year comparisons ahead.

Despite being the largest domestic gaming company by property count and recently opening Caesars Virginia in Danville, the company's debt burden remains a significant concern. The trailing-12-month EBIT/interest expense ratio stands at 1.0x, suggesting potential asset sales may be necessary for debt reduction.

In 2024, Caesars already made progress on debt reduction through strategic sales:

• World Series of Poker (WSOP) to NSUS Group Inc. for $500 million
• LINQ Promenade to TPG Real Estate and Acadia Realty Trust for $275 million

Industry analysts suggest Caesars might consider additional strategic moves, including potentially spinning off its digital operations, which include Caesars Sportsbook. While this could help reduce debt, the company hasn't officially confirmed such plans.

Caesars will release its fourth-quarter results after US markets close on Tuesday, February 25th.

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