J.P. Morgan Sees Continued Upside In The Macau SAR-Centric Equities

  • J.P. Morgan analyst Joseph Greff provides insight on the outlook for gaming and lodging stocks/companies in the fiscal year 2023.
  • The analyst sees more compelling value and better risk-rewards in gaming versus lodging, given better values and differing sets of investors’ expectations for fundamentals.
  • Also, the analyst adds that the gaming stocks reflect lower than average valuations, reflecting investor concerns over the sustainability of presently strong spend per visit and material pandemic-related margin gains.
  • Meanwhile, larger lodging corporations like Marriott International Inc MAR and Hilton Hotels Corporation HLT possess above-average valuations versus history, reflecting a higher set of investor expectations.
  • The analyst sees continued upside in the Macau SAR-centric equities, Las Vegas Sands Corp LVSWynn Resorts Limited WYNNMelco Resorts & Entertainment Ltd MLCO.
  • Also ReadMacau Casino Stocks Rally Following License Renewal Set To Begin On Jan. 1, 2023
  • In gaming, the analyst also likes LV Strip-centric operators, MGM Resorts International MGM and Caesars Entertainment Inc CZR, given attractive valuations and a solid backdrop for the market.
  • RelatedMGM Resorts Analyst Turns Bullish, Upgrades Casino Stock Despite Challenging 2023
  • Within lodging, the analyst lists Wyndham Hotels & Resorts Inc WH and Hyatt Hotels Corporation H as relative outperformers.
  • U.S. gaming stocks, up until market-wide moves off the bottom in late September and October, have sizably underperformed the S&P 500. It is due to investor concerns that well-above pre-pandemic casino spend per trip and significant pandemic margins gains may not be sustainable given a negative macro backdrop.
  • On the other hand, Macau, until very recently, had been abandoned by investors and has massively underperformed the rest of the analyst’s coverage universe since the pandemic’s bottom in 2020.
  • Greff thinks recent policy moves and commentary would suggest China and Macau will gradually improve travel/mobility, setting up a recovery in the 2Q23.
  • When RevPAR growth accelerates, lodging stocks tend to outperform, says the analyst. looks at lodging as having really attractive growth through the 1Q23.
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  • Price Action: WH shares are trading lower by 0.07% at $71.28 on the last check Thursday.
  • Photo Via Company
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