Morgan Stanley Comments On Macau Gaming; Changes Rating On Two Casino Stocks Offering Potential Trade

On Tuesday, Morgan Stanley analysts offered comments on the Macau gaming industry.
Carlo Santarelli finds that overall revenue forecast for fourth quarter 2014 and 2014 are -15.3 percent and 0 percent, respectively.

Amid the industry coverage, Morgan Stanley changed the investment rating on two casino stocks which offers a potential pairs trade on the two products.

Las Vegas Sands Corp LVS downgraded to Hold; lowers price target to $65. Currently trading at $61.38 down 2.4 percent.

MGM Resorts International MGM upgraded to Buy; raised price target to $30. Currently trading at $22.10 down 0.4 percent.

Since both stocks are within the same sector, an investor could place a pairs trade on the aforementioned stocks buy purchasing shares of MGM and selling shares of LVS on a equivalent notional basis.

As long as shares of MGM outperform shares of LVS (even if both stocks go down), an investor will profit from this pairs trade.