Red Rock Resorts projects may get a boost from interest rate cut

The half-percent interest rate cut approved by the Federal Reserve Bank this week could accelerate growth plans by Red Rock Resorts, which operates locals casino giant Station Casinos, a Wall Street analyst reported.

Deutsche Bank gaming analyst Carlo Santarelli, in a report issued to investors Wednesday, said the company may take advantage of the rate cut by moving up development of its 128 acres at Cactus Avenue and Las Vegas Boulevard or its 49 acres at Inspirada.

“At present, we believe (Red Rock) is weighing a development on the 128-acre Cactus land, which we believe would be a development akin to Red Rock Resort in scope; Durango Phase II, which would follow the parking and gaming floor expansion project that is getting underway; and a development on the 49-acre Inspirada site, which would be a smaller scale development (around 60 percent of Durango) that caters to the highly affluent subdivision of Anthem,” Santarelli said in his report. “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 issued the report after a two-day meeting with Red Rock Resorts executives.

The analyst noted the company already is on track to manage a new California tribal casino.

North Fork, off California Highway 99 between Fresno and Madera, is expected to have around 2,500 slot machines and 40 to 50 table games and ready to open in the first half of 2026. Phase I of the project won’t have a hotel.

After Deutsche Bank’s meeting with executives, Santarelli said he continues to believe the Las Vegas locals market is stable with high-end outperformance boding well for Red Rock and the locals promotional environment remains active. He said the North Fork addition is “underappreciated” and the analyst has maintained a “buy” rating on stock with a price target of $65 a share. On Thursday, the stock price ranged around $54 with the price bouncing between $38 and $63 over the past year.

Red Rock management told Deutsche Bank that the company database is stable with Durango, which opened in December, adding about 45,000 new customers.

The optimism around rate cuts is based on the positive outlook on the housing market and existing home sales and “continued growth on the geographic periphery of the locals market.”

But Santarelli said there could be headwinds.

“We believe seasonality is likely to be more pronounced in the third quarter relative to recent years, given a confluence of factors, including more limited stimulus money in the market, the Olympics, the hotter than normal summer months, and the upcoming presidential election,” he said.

“Looking ahead to the fourth quarter, management noted, as they have previously, the challenging group comparisons related to the rebooking activity post COVID, as a headwind,” he said. “In addition, we expect the overhang of the November election to continue to weigh on locals market trends into the fourth quarter, while we also want to remain cognizant of Strip softness in the quarter and its potential impact on the locals market.”

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.