Susquehanna analyst Rachael Rothman is bullish on Las Vegas and Macau, but she cautions casino investors that they may be in for a bumpy ride in the second half of the year.
“Limited visibility leads to big beats/misses vs. estimates while multiples expand and contract simultaneously overweighting each new data point, and leading to material changes in price targets. Nowhere in our coverage is this phenomena more evident than in Macau, where trends can be up/down double digits one month, and completely reverse themselves the next,” Rothman explains.
Related Link: Macau's 26-Month Losing Streak Is Finally Over
When it comes to Las Vegas, Rothman is forecasting a strong Q3 Convention season marked by 8 percent RevPAR growth and single-digit gaming revenue growth on the quarter. For investors bullish on Vegas, Rothman recommends MGM Resorts International MGM.
In Macau, Susquehanna is materially raising its previous guidance for the rest of 2016. The firm has upped its Q3/Q4 Macau gaming revenue growth projections from -7.3/-5.7 percent to +0.3/+2.7 percent. For investors bullish on Macau, Rothman recommends Las Vegas Sands Corp. LVS.
Susquehanna maintains Positive ratings on Sands and MGM and a Neutral rating on Wynn Resorts, Limited WYNN. However, the firm has raised its price targets on the three stocks to $63, $30 and $105, respectively.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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