12:59 PM EDT, 09/17/2024 (MT Newswires) -- Caesars Entertainment ( CZR ) is expected to benefit more than other game-sector companies as the Federal Reserve begins loosening its monetary policy as soon as this week, B. Riley Securities said in a note emailed Tuesday.

Since the Fed began raising interest rates in March 2022 in an effort to combat inflation, the resort and casino operator's stock has declined by roughly 50%. The Russell 2000 is up about 7.8% over that time, while average peer stock prices declined 3%, the brokerage wrote. The Fed has lifted its policy rate by 525 basis points in total from March 2022 to July 2023.

For every 100 basis points in lowered rates, B. Riley estimates that Caesars' interest expense will decline, and therefore its free cash flow will increase, by $60 million.

"As the (Fed) narrative moves from rising to declining interest rates, we believe (Caesars Entertainment's ( CZR ) stock) should be the top beneficiary in the gaming sector," analyst David Bain wrote.

The Federal Open Market Committee's two-day meeting begins Tuesday, with a decision on its benchmark lending rate expected Wednesday. There is a 63% chance the FOMC will cut interest rates by 50 basis points, with the remaining odds in the favor of a 25-basis-point reduction, according to the CME FedWatch tool.

Caesars may also be able to refinance its $1.6 billion 8.125% fixed senior notes next year as rates fall further, Bain said. The brokerage estimates that capital expenditures will decrease by about $250 million in 2025.

Caesars' 2024 core earnings estimates are 18% higher than its 2022 reading, according to the B. Riley report.

Penn Entertainment's ( PENN ) stock plunged 55% over the two-and-a-half-year period while its estimated 2024 earnings before interest, taxes, depreciation and amortization are down 78% from 2022 actuals, B. Riley's analysis showed. MGM Resorts International's ( MGM ) stock dropped 14% while its current-year EBITDA estimates are down by 3%.

Price: 39.69, Change: +0.26, Percent Change: +0.66