Market Overview

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

Share:

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 four percent from a year earlier.

While regionals are looking better than its snowy first quarter's six 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 (NYSE: LVS) will post earnings of $0.88 per share, compared with the Street view of $0.91. Kelley has a target of $98 and a Buy rating on MGM.

For Wynn Resorts (NASDAQ: WYNN) Kelley forecasts $2.07 per 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 per 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 (NYSE: BYD) and Caesars Entertainment (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.

Latest Ratings for LVS

DateFirmActionFromTo
Oct 2020JefferiesMaintainsBuy
Oct 2020Morgan StanleyMaintainsEqual-Weight
Oct 2020Deutsche BankMaintainsBuy

View More Analyst Ratings for LVS
View the Latest Analyst Ratings

 

Related Articles (LVS)

View Comments and Join the Discussion!

Posted-In: Bank of America Macau Shaun C. KelleyAnalyst Color Analyst Ratings

Latest Ratings

StockFirmActionPT
THOWedbushInitiates Coverage On107.0
WGOWedbushInitiates Coverage On67.0
WLLMKM PartnersInitiates Coverage On30.0
ABNBAtlantic EquitiesInitiates Coverage On75.0
PGRKeefe, Bruyette & WoodsUpgrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com