Analyst Retains Positive Outlook for Casino Stocks Despite Subtle Price Goal Adjustments


Following an unanticipated dull performance in June’s gross gaming revenue (GGR) index for Macau, a degree of cautious rectification has been applied to price goals for Las Vegas Sands (NYSE: LVS) and Wynn Resorts (NASDAQ: WYNN) by a profound market analyst. Despite the correction, the analyst sustains a positive overall outlook on both casino stocks.

The unfolding narrative in the financial stage of the casino industry took an interesting turn, as Macquarie analyst, Chad Beynon, revealed marginally adjusted price predictions for Sands and Wynn—now at $58 and $126, correspondingly. This announcement comes down from his earlier projections of $60 and $128, indicating a subtle but noteworthy change in the market’s pulse.

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Viewed objectively, these revised figures suggest a promising 40% upswing for Sands from its position on July 8. As the most significant player operating five integrated resorts in Macau, this prospect seems attainable. Echoing a similar air of optimism, Wynn’s new target price carries a possible 12-month increase of 30%.

Responding to the rhythm of the market, Beynon stated, “Consensus is generally modest, notably regarding WYNN, which I believe can increase its share. We maintain our confidence in Macau’s potential for long-term growth and ranked Macau as our prime sector in our 2024 Gaming evaluation.”

Maintaining his bullish stance, Beynon retained his “outperform” rankings for both Sands and Wynn, as well as MGM Resorts International (NYSE: MGM)—a global brand holding a commanding 56% stake in MGM China, operator of two Macau-based casino resorts.

Despite June’s numbers falling short of earlier predictions, Macau’s GGR seems to be progressing positively. For the second quarter, a combined figure of $7.1 billion emerged. Although this is 23% below the corresponding period in 2019—the last year before Covid-19—it marks an improvement on first-quarter GGR, which trailed 25% behind 2019.

Caught in the twist of events, casino equities in Macau witnessed a declining frequency in visits, but anticipate a resurgence towards pre-pandemic levels, which could potentially boost growth in Macau’s gaming industry.

However, the cloud of uncertainty still hovers as investors were not very patient with Macau stocks in 2024, reflected in a 7% decrease, even as the S&P 500 index swelled impressively by nearly 17%.

According to Beynon, “July’s GGR is expected to register at ~$2.4 billion, which is a reduction of 22% from 2019 figures”. Additionally, there’s the prediction of a 4% sequential, 20% year-over-year, and a 17% decrease from 2019 for the 3rd quarter GGR amounting to nearly $7.4 billion.

In light of these figures, the importance of attracting mass-market bettors in Macau non-gaming amenities to Sands and Wynn should not be understated, especially with the lackluster performance of the VIP market. The hope is that the ability of these operators to satisfy these needs can drive more traffic, a strategy Sands China seems particularly successful in executing, with Wynn Macau also showing notable progress. These dynamics could contribute to a stronger GGR figure for Macau in 2024.

Beynon concluded, “For 2024, we anticipate a GGR of 20% less than 2019 figures (~ US$29.3bn), despite a predicted operator revenue growth in mass and non-gaming markets. We plan for margin gains despite higher operating expenses concessions.”