On Tuesday, Morgan Stanley analysts offered comments on the Macau gaming industry.
Carlo Santarelli finds that overall revenue forecast for fourth quarter 2014 and 2014 are -15.3 percent and 0 percent, respectively.
Amid the industry coverage, Morgan Stanley changed the investment rating on two casino stocks which offers a potential pairs trade on the two products.
Las Vegas Sands Corp LVS downgraded to Hold; lowers price target to $65. Currently trading at $61.38 down 2.4 percent.
MGM Resorts International MGM upgraded to Buy; raised price target to $30. Currently trading at $22.10 down 0.4 percent.
Since both stocks are within the same sector, an investor could place a pairs trade on the aforementioned stocks buy purchasing shares of MGM and selling shares of LVS on a equivalent notional basis.
As long as shares of MGM outperform shares of LVS (even if both stocks go down), an investor will profit from this pairs trade.
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