Q2 Gaming A Winner In Las Vegas; Not So Much Regionally

Strong Las Vegas results coupled with weakness in Macau and regional gambling adds up to a mixed bag for gaming stocks, an analyst said Monday.Macau's gaming revenue in June posted its first drop since 2009, falling nearly four percent in the face of a slowdown in China's economy and competition from the World Cup Games, Bank of America's Shaun C. Kelley said in a note.But in Las Vegas, hotel revenue per available room climbed 6.5 percent in the quarter through May and gaming revenue grew nearly 11 percent.Out in the hinterlands, "cannibalization and structural headwinds are still issues," Kelley said, with same-store revenue down about 4 percent from a year earlier. While regionals are looking better than their snowy first quarter's 6 percent revenue decline, June's data "has been so far weak, and same-store sales are materially negative," Kelley said.Kelley expects Las Vegas Sands Corp. (NYSE: LVS) will post earnings of $0.88 cents a share, compared with the Street view of 91 cents. Kelley has a target of $98 and a buy rating on MGM.For Wynn Resorts Ltd. (NASDAQ: WYNN) Kelley forecasts $2.07 a share in profits, versus the consensus of $2.06. His target is $275 with a Buy rating.Kelley raised his estimate for MGM Resorts International's (NYSE: MGM) earnings before interest taxes, depreciation and amortization to $595 million from $586 million. Kelley maintains a buy on MGM and a target of $33.50, although he believes the stock might hit $44 a share by 2016.Among regional gaming stocks, Kelley cites competition and regional regulatory issues for Underperform ratings on Penn National Gaming (NASDAQ: PENN)Boyd Gaming Corp. (NYSE: BYD) and Caesars Entertainment Corp. (NASDAQ: CZR).But Louisiana and Midwest-focused Pinnacle Entertainment (NYSE: PNK) gets a Buy rating with a $28 target. Kelley likes a recent merger, new marketing initiatives and its potential for cutting debt and boosting cash flow.