Gambling stocks have been a mixed bag for investors in 2021 given uneven trends in U.S. casino gambling, online sports betting and iGaming, as well as a sluggish recovery in the Macau, China market. On Thursday, one analyst cut price targets for two gaming leaders that are being dragged down by Macau.

The Analyst: Bank of America analyst Shaun Kelley reiterated his Buy rating for Wynn Resorts, Limited (NASDAQ:WYNN) but cut his price target from $145 to $130.

Kelley also reiterated his Neutral rating for Las Vegas Sands Corp. (NYSE:LVS) but cut his price target from $67 to $60.

Related Link: July 4 Weekend Room Rates In Las Vegas Now 50% Above Pre-Pandemic Levels

The Thesis: Kelley said there are at least five bullish catalysts driving a better-than-expected recovery in U.S. gaming:

1. Strong consumer spending trends.
2. Pent-up entertainment demand.
3. Easing COVID-19 restrictions.
4. The return of older gamblers.
5. A recovery in air travel.

As a result, regional U.S. casino gross gaming revenue was up 9% from 2019 levels in the month of June. In addition, May Las Vegas Strip GGR was up 27% compared to 2019 levels.

Unfortunately, a COVID-19 outbreak in Guangdong in May has left Macau as the major laggard in the gambling industry. Kelley is now projecting Macau GGR will still be between 10% and 20% below 2019 levels.

“Sequential trends could bounce back and some local restrictions have been removed, but we expect a slow recovery with limited visibility until full vaccination is reached (likely in late 2021),” Kelley wrote in a note.

For now, it appears stock selection will be critical within the gaming group. Here are Bank of America’s six Buy-rated names in the space:

Benzinga’s Take: For now, casino stock investors will be watching the U.S. markets to see whether or not the booming gaming industry is merely a temporary phenomenon due to stimulus and pent-up demand or whether the market can maintain its recent momentum. In Macau, investors will be watching to see just how long it may take the industry to return to pre-pandemic levels.