Macau Lockdown Slashes Targets For Las Vegas Sands, MGM, Wynn — Try These 3 US Casino Stocks Instead

Gambling stocks traded sharply lower on Monday morning as Macau casinos shut down for a week. In response, one Wall Street analyst cut his price targets for U.S.-listed casino stocks with exposure to Macau.

The Analyst: Bank of America analyst Shaun Kelley issued the following price target cuts on Monday:

• Las Vegas Sands Corp. (NYSE: LVS), reiterated Underperform rating and lowered the price target from $38 to $36.
• Wynn Resorts, Limited (NASDAQ: WYNN), reiterated Neutral rating and lowered the price target from $75 to $70.
• MGM Resorts International (NYSE: MGM), reiterated Neutral rating and lowered the price target from $45 to $40.

Related Link: Final Draft Of Macau Gaming Law: What Investors Need To Know

The Thesis: Macau's gross gaming revenue (GGR) dropped 26% month-over-month in June and remains down about 90% from pre-COVID-19 pandemic levels in 2019. Rising COVID-19 case counts in the area have prompted another round of travel restrictions and shutdowns in Macau. The city will close more than 30 casinos and other non-essential businesses for the entire week as part of China's zero-COVID policy.

Even U.S. operators with no exposure to Macau traded lower in sympathy to the Macau trade, but the latest batch of data out of Las Vegas highlights the local casino industry is booming. For May, Las Vegas Strip's GGR was up 23% month-over-month and is now up 41% compared to pre-pandemic levels in 2019.

Related Link: MGM Resorts Analysts React To Q1 Earnings Beat, LeoVegas Acquisition, Macau Weakness

For now, Bank of America is much more bullish on a handful of casino stocks focused entirely on the U.S. market. The firm has Buy ratings for Caesars Entertainment Inc (NASDAQ: CZR), Penn National Gaming, Inc (NASDAQ: PENN) and Boyd Gaming Corporation (NYSE: BYD).

Benzinga's Take: U.S. casino stocks are certainly at risk if the economy falls into a recession, so it's not surprising to see U.S. casino stocks trading lower on Monday given the S&P 500 was down as a whole. However, Caesars and Penn endured particularly sharp sell-offs on Monday which could in part be a knee-jerk sympathy trade overreaction to the negative headline out of Macau, which have nothing to do with the businesses of either company.