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The Casino Stock Gamble: Telsey Initiates Coverage On Wynn, Las Vegas Sands, Penn National

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The Casino Stock Gamble: Telsey Initiates Coverage On Wynn, Las Vegas Sands, Penn National
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At least one U.S. casino stock could be worth taking a gamble on in 2018, but it might not be one of the first stocks that comes to mind. 

The Analyst

Telsey Advisory Group analyst Brian McGill initiated coverage on the following three gaming stocks:

  • Las Vegas Sands Corp. (NYSE: LVS): Market Perform rating and $76 price target.
  • Wynn Resorts, Limited (NASDAQ: WYNN): Market Perform rating and $200 price target.
  • Penn National Gaming (NASDAQ: PENN): Outperform rating and $33 price target.

The Thesis

The Macau market will continue to be a high-growth opportunity for Las Vegas Sands and Wynn in coming years, but there is simply too much uncertainty around the renewal of their gaming licenses, or concessions. Wynn and Sands’ concessions are set to expire in 2022. While McGill doesn’t foresee any major risk of the companies losing their licenses, he said it is unclear what conditions the Macau government will apply to their renewal. 

In the meantime, McGill says there are plenty of positive catalysts for U.S. regional gaming stocks like Penn. McGill said Penn stands out due to its strong leadership team, its capital spending discipline and its growth opportunities.

“Regional gaming results are going to be driven by the strong economic fundamentals of better employment, wage gains, housing prices and a general lack of new competition in most gaming markets,” the analyst said in a note. 

Price Action

Wynn shares were down 0.28 percent at the time of publication, while Sands was down 0.56 percent. Penn shares were soaring 3.49 percent midday Wednesday. 

Related Links:

Las Vegas Strip Gaming Sales Down Nearly 9% In January

Height Sees Little Risk To Wynn Licenses

Latest Ratings for LVS

DateFirmActionFromTo
Oct 2018ArgusMaintainsBuyBuy
Oct 2018NomuraMaintainsNeutralNeutral
Oct 2018HSBCUpgradesHoldBuy

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