Macquarie Analyst Sees 2010 in Vegas as 'Transitional' (MGM, LVS, WYNN, PENN, More)

December 24, 2009 10:52 AM EST
A Macquarie Equities Research analyst, in an interview with Tech Ticker, said that 2010 will not see a big rebound in casino stocks. The analyst sees 2009 as a "bottoming out" year for Las Vegas, and 2010 will be more of a transitional year.

The big news in Las Vegas is the opening of the new City Center complex, an investment that also made news this earlier in the month with its financing from Dubai World coming into question. The complex has 600 rooms, about 4.2% of Vegas' capacity, and adds about 20% to the high-end room capacity in the city.

A casino named Cosmopolitan a $4 billion investment, could potentially open in Q410, and Fountainebleau in 2010 or 2011. Room rates will be pressured from an "unmitigated supply wave" of new construction.

Macquarie is contrarian in their view of City Center. He also sees a "flattish" convention outlook for 2010.

Las Vegas is currently experiencing 22 months of declining gaming revenues.

Another factor is some states passing laws which allow some form of gaming, reducing the need to go to Las Vegas. Some smaller gaming stocks, like Penn National Gaming (NASDAQ: PENN), may be a better play as it has exposure to the Pennsylvania, Ohio, and West Virginia gaming markets.

Casino stocks to watch in 2010:
  • Las Vegas Sands Corp. (NYSE: LVS);

  • Wynn Resorts (NASDAQ: WYNN);

  • MGM Mirage (NYSE: MGM);

  • Boyd Gaming Corp. (NYSE: BYD);

  • Penn National Gaming;

  • Pinnacle Entertainment (NYSE: PNK)

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