What To Expect Out Of Macau From Q2

UBS analyst Robin Farley took a closer look at the casino industry closely as some of the biggest players release Q2 earnings over the next few weeks.

Farley’s Ratings

• Las Vegas Sands Corp. (NYSE: LVS) - Neutral
• Meclo Resorts & Entertainment (ADR) (NASDAQ: MLCO) - Buy
• MGM Resorts International (NYSE: MGM) - Buy
• Wynn Resorts, Limited (NASDAQ: WYNN) - Buy

Key Takeaways

• Farley estimates overall Macau market EBITDA growth of 29 percent, which is ahead of gross gaming revenue of 22 percent. She sees the higher end market in Macau continuing to do well off of junket liquidity and strong hold rates.
• Farley believes Wynn and Melco have gained the most market share in VIP in Q2 and have taken away market share from Las Vegas Sands and MGM.
• In the mass segment, Sands and Wynn have gained the most market share as demand for the Partisan and Wynn Palace continues to increase.
• As far as profitability goes, Q2 has had a lower top line, and Farley anticipates investors could see a higher operating expense due to an increase in wages.

Overall, Farley likes Wynn the most out of the group and expects the luxury hotel and resort company to see the highest year-over-year EBITDA, and he set a $147 price target.

“We continue to prefer Wynn as a Macau play: we believe near term strength in high-end gaming in Macau, combined with further ramping of the Wynn Palace could drive re-rating of the stock.”

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