Trend Forming as Another Analyst Slashes Macau Growth Estimates (LVS) (WYNN) (MGM) (MPEL)
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Price: $57.55 -0.43%
Rating Summary:
18 Buy, 7 Hold, 0 Sell
Rating Trend:
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Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
Rating Summary:
18 Buy, 7 Hold, 0 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 13
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Citi's Anil Daswani reduced price targets on Casino & Gaming stocks across the board Wednesday morning as he is getting more bearish on the Macau market.
Daswani now sees gross gaming sales within the region up 13 percent this year, down from a prior estimate of 20 percent growth. The analyst pointed to data showing revenue growth has slowed from 42 percent in the first half of 2011 to just 20 percent in the same period during 2012.
Daswani said his new price targets are based on "more conservative" EBITDA multiples given an expected delay in an eventually-needed shift from growth to "sustainable and recurrent" mass market profits.
The analyst reduced his price target on shares of Las Vegas Sands (NYSE: LVS) by about 7 percent from $66.80 to $62, his target on Wynn (Nasdaq: WYNN) by nearly 30 percent from $150 to $107, and his target on MGM (NYSE: MGM) from $16 to $11.50.
The warning shot follows a wave of lowered estimates from sell-side firms over just the last few days. On July 6th, Macquarie told investors to stay away from Casino stocks. Then on Monday of this week, both Wells Fargo and KeyBanc had some concerning comments on the group. JPMorgan reduced estimates on Las Vegas Sands yet again on Tuesday. On the other side of the trade, Goldman Sachs added Galaxy Entertainment to its Conviction Buy List and upgraded Wynn Macau on Thursday of last week.
Traders in the sector seem to have baked in some fears related to slower-than-expected growth in Macau, but to what extent is unclear. Las Vegas Sands shares are down 26 percent since the beginning of May, shares of Wynn are down 24 percent, and MGM shares have fallen about 23 percent. Additionally, shares of Melco Crown (Nasdaq: MPEL) are down 33 percent over the last two months.
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Daswani now sees gross gaming sales within the region up 13 percent this year, down from a prior estimate of 20 percent growth. The analyst pointed to data showing revenue growth has slowed from 42 percent in the first half of 2011 to just 20 percent in the same period during 2012.
Daswani said his new price targets are based on "more conservative" EBITDA multiples given an expected delay in an eventually-needed shift from growth to "sustainable and recurrent" mass market profits.
The analyst reduced his price target on shares of Las Vegas Sands (NYSE: LVS) by about 7 percent from $66.80 to $62, his target on Wynn (Nasdaq: WYNN) by nearly 30 percent from $150 to $107, and his target on MGM (NYSE: MGM) from $16 to $11.50.
The warning shot follows a wave of lowered estimates from sell-side firms over just the last few days. On July 6th, Macquarie told investors to stay away from Casino stocks. Then on Monday of this week, both Wells Fargo and KeyBanc had some concerning comments on the group. JPMorgan reduced estimates on Las Vegas Sands yet again on Tuesday. On the other side of the trade, Goldman Sachs added Galaxy Entertainment to its Conviction Buy List and upgraded Wynn Macau on Thursday of last week.
Traders in the sector seem to have baked in some fears related to slower-than-expected growth in Macau, but to what extent is unclear. Las Vegas Sands shares are down 26 percent since the beginning of May, shares of Wynn are down 24 percent, and MGM shares have fallen about 23 percent. Additionally, shares of Melco Crown (Nasdaq: MPEL) are down 33 percent over the last two months.
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Analyst Comments, Analyst PT ChangeRelated Entities
Goldman Sachs Conviction Buy List, JPMorgan, Citi, KeyBanc, Wells Fargo
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