Goldman Sachs Has Mixed Feelings About U.S. Gaming Stocks

Now that Q1 earnings season for U.S. gaming stocks has come and gone, Goldman Sachs analyst Steven Kent recently revisited the firm’s outlook for Las Vegas Sands Corp. (NYSE: LVS), Penn National Gaming, Inc (NASDAQ: PENN) and Scientific Games Corp (NASDAQ: SGMS).

Penn's Solid Quarter Keeps Goldman Happy

Goldman remains bullish on Penn after the company delivered another solid quarter. The firm maintains its $18 price target, which is based on 7.6x estimated 2017 adjusted EBITDA. Although the regional U.S. gaming space faces potential cannibalization in coming years, Kent maintains a Buy rating on Penn.

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Las Vegas Sands, Here And Abroad

The picture for Las Vegas Sands continues to improve, especially in Macau. Macau mass revenues are stabilizing, and the company reported that the Parisian resort is on track to open in September of this year. Despite a weak Q1 showing from Singapore, Kent saw enough out of Sands to up Goldman’s price target for the stock from $42 to $45. However, the firm maintains its Neutral rating.

Scientific Games Fails To Inspire

Finally, Goldman is still bearish on Sell-rated Scientific Games after a disappointing quarter.

“We remain wary of structural challenges facing the industry, and SGMS is still the most levered name in our coverage at 6.8x 2017E net debt/EBITDA,” Kent noted.

Goldman upped its price target for the stock from $5 to $5.70, but even the higher target represents significant downside from current levels.

Disclosure: The author holds no position in the stocks mentioned.