The Star Entertainment Group Ltd (ASX: SGR) share price has fallen 56% in the last year, so is now the time to pounce?
The Star Entertainment share price is up 1.19% in late afternoon trade on Thursday at $1.275. For perspective, the S&P/ASX 200 (ASX: XJO) is 0.05% higher at the time of writing.
Let's check the outlook for Star shares.
What's ahead for Star?
Star Entertainment shares plunged yesterday amid the company's trading update. Star revealed it is experiencing "significant and rapid deterioration" in operating conditions at the company's Sydney and Gold Coast casinos.
Star shares fell nearly 11% in early trade yesterday before slightly recovering to close 7.35% in the red.
However, one broker is positive Star's share price could have some upside. Analysts at CLSA have upgraded Star to "accumulate" with a $1.50 price target, The Australian reported. This implies an upside of 17% based on the company's share price at the time of writing.
The Star Entertainment share price has shown that it can recover in the past. Three years ago, Star shares plunged 62% from $3.91 on 21 February 2020 to $1.49 on 20 March 2020. However, the company's share price then recovered 173% to hit $4.07 on 1 October 2021. Since that date though, Star shares have tumbled again, down 68% to today's price of $1.275 a share.
Moving forward, Star's board and management have just revealed major plans to lower the operating cost of the company.
These include cutting 500 full-time equivalent jobs, cancelling the company's short-term and other incentives in FY23, and freezing the salary of non-EBA employees.
Star has also engaged Barrenjoey Capital Partners for a strategic review of The Star Sydney and to look into other options that could increase value for the company's shareholders.
Star has downgraded its earnings before interest, tax, depreciation, and amortisation (EBITDA) guidance to between $280 million and $310 million for the full year. This is down from a previous guidance of $330 million and $360 million.
Star is also planning to sell the Sheraton Grand Mirage Resort on the Gold Coast. Star held a $595 million capital raise in February this year.
Share price snapshot
The Star Entertainment share price has slid 21% in the year to date and 12% in the last month. The company's share price has fallen 73% over the last five years.
For perspective, the ASX 200 has declined 2.56% in the past year.
This ASX share has a market capitalisation of about $2 billion based on the current share price.
