Churchill Downs, Boyd Gaming and Cedar Fair are top gaming and leisure picks at Mizuho

Mizuho started off coverage on the gaming and leisure sector on Tuesday.

One of Japanese firm's top picks was Churchill Downs (NASDAQ:CHDN), which was called out for having compelling growth opportunities over the near- to medium-term that are expected to support earnings and free cash flow generation. Analyst Ben Chaiken also sees potential upside from gray market legislation changes, which could make unregulated games a criminal offense to reduce competition for CHDN in Virginia and Kentucky.

Boyd Gaming (NYSE:BYD) also landed a Buy rating from Mizuho in its first sweep of the sector. Analysts Ben Chaiken and Alok Patel noted that there are compelling growth and development opportunities for BYD not reflected in the current consensus estimates. The firm also reminded that FanDuel's 5% stake in BYD may be underappreciated. A compelling risk- reward profile is seen for the casino stock, the with downside support at ~$51 per share.

Cedar Fair (NYSE:FUN) was also one of the Buy recommendations from Mizuho. The firm's bull rating was noted to be supported by upside to EBITDA from the synergies associated with the Six Flags (SIX) merger and improvement in operating strategy at legacy Cedar Fair, which could be meaningful to earnings. Mizuho also sees longer-term revenue synergies from sharing IP around ride development, which are not currently included in synergy guidance.

Churchill Downs (CHDN) rose 1.65% in early trading, while Boyd Gaming (BYD) shot up 2.47%. Cedar Fain (FUN) tracked 0.95% higher.