KeyBanc Downgrades LVS, MGM, WYNN to Underweight; Concerned with Discretionary Spending Levels
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An analyst at KeyBanc has made a drastic call on the Casinos and Gaming sector this afternoon, downgrading shares of all the major casino operators: Las Vegas Sands (NYSE: LVS), MGM MIRAGE (NYSE: MGM) and Wynn Resorts (Nasdaq: WYNN).
The analyst, citing concerns related to still-weak levels of discretionary spending, downgraded each stock from Hold to Underweight. KeyBanc points out that the entire gaming industry is predicated on discretionary spending, and that recent macro economic data has not been encouraging. Specifically, the analyst mentions flat personal income and consumer sentiment which remains challenged.
Further, KeyBanc says it does not expect to see "any material turnaround in Las Vegas prospects in 2010. Any uptick in demand will likely be more than offset by the new supply coming on at CityCenter in December. There has been improvement in the gaming climate in Macau, thought that is now well known."
Looking at each company:
- Las Vegas Sands - sets an $8 price target, saying its valuation is among the highest in the gaming group. With shares of Las Vegas Sands trading down 1% to $14.62 today, the firm's new price target represents potential downside of 45%.
- MGM MIRAGE - sets a $5.50 price target. Although the firm does note MGM's attempt to "right the ship", it says that uncertainty related to the outcome, as well as with the recession, warrant an Underweight rating. With the stock down 4.5% today to $9.30, the new target represents possible downside of about 41%.
- Wynn - sets a $45 price target. Shares are down more than 4% today, most recently trading at $53.77. The new target represents potential price depreciation of about 16%.
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Comments
Earnings
How are u going to downgrade LVS when they just blew away the estimates. Consumer spending has been bad and they BLEW AWAY the estimates. They have another casino going up in Singapore. Their stock was over 120 dollars not 2 long ago and your giving them an $8 dollar price target. I'd say its laughable, but it's more like ridiculous. But, i hope it does so I can put all the money I made off this company back into it.
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Analysts
Mke on Oct 30, 2009 03:13 PMI dont know what this analysts from keybanc motives are. The stock market is forward looking. U dont wait for the economy to get better before u invest. U invest before its gets better so U CAN MAKE MONEY. He must b related to the analyst that said Dendreons phase 3 results would be bad the day b4 they released their results. The stock went from $6 to around $27. Its pathetic what these analysts will do to make themselves money.