In the dynamic world of high stakes and vibrant casino floors, the upcoming year is shaping up to be a pivotal one for the industry’s key players. As some domestic-focused casino operators brace for a challenging 2024, two giants in the field—Las Vegas Sands Corp. and Wynn Resorts Ltd.—are positioned to cash in on their strategic bets abroad. The market’s keen eye turns towards Macau, the glittering gaming haven where fortunes are often made or lost against a backdrop of opulent integrated resorts.
What makes the prospects of Sands and Wynn Resorts particularly compelling is the analysis from Deutsche Bank’s seasoned expert, Carlo Santarelli. He has identified these two entities as the foremost contenders for casino stock supremacy in the race to capitalize on Macau’s promising yet unpredictable landscape. With a price target of $124 for Wynn, Santarelli envisions a potential surge of almost 44% over the approaching year, while projecting a robust 36% ascent to a $65 price target for Las Vegas Sands.
Fueling Santarelli’s optimism is a conviction in Macau’s enduring allure, where the combined efforts of these operators drape seven opulent resorts, promising verdant paths to growth and positive financial reassessment. Despite the looming shadows cast by macroeconomic challenges and extensive capital investments in the region, these potential vulnerabilities seem to have been meticulously factored into LVS and Wynn’s current share prices. Worth noting is that historical data rarely links a sluggish Chinese economy with any significant drop in Macau’s Gross Gaming Revenue.
As we gaze into the financial crystal ball for 2024, US casino conglomerates steeped in the Chinese market, such as Sands and Wynn, may find themselves in an enviable position. Las Vegas Sands stands unique as a titan with no domestic properties. On the other hand, while Wynn operates prestigious venues in the heart of Las Vegas and Boston, their lion’s share of earnings hails from the bustling Macau strip. This might prove to be a windfall, especially with the anticipated dip in gambling spend by US consumers in the coming months.
Through the strategic lens of Deutsche Bank’s Santarelli, the forecast for domestic casino operators on home turf isn’t as bright, predicting a static year where wringing out growth in earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs could be a tall order. But the savior could be within these challenges themselves, where expectations have tempered to a degree that offers ripe opportunities for foresight and strategic investment.
As investors roll the dice on the future of gaming stocks, LVS and Wynn remain poised and ready, not just to participate, but to dominate the leaderboard. Santarelli’s reports deem their consensus financial estimates both “rational and achievable.” Not to be overlooked is the tantalizing valuation of Macau concessionaire shares excluding MGM China, which at present hovers noticeably below their starting points earlier in the year, notwithstanding impressive GGR strides throughout 2023.
As we have seen, while the game of chance and strategy continues to evolve on the global casino stage, our ever-changing landscape offers seasoned players like Sands and Wynn a potent opportunity to reaffirm their dominance. The calculated dance of investments and returns plays on, and as fate shuffles the deck for the year ahead, a full house seems to be in their sights, their stock valuations reflecting a robust return to “normal” trading levels on normalized earnings.
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