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.
