Macau casino earnings call filled with positives in early May – and Barclays analysts expect optimism to continue.
“This is not the end of Macau’s moment,” Barclays US Gaming Leisure & Lodging analyst Brandt Montour wrote in a new note on Wednesday
Montour upgraded Wynn Resorts (WYNN) to overweight from equal weight and raised its price target from $120 to $135. The firm is bullish on the casino operator due to a resurgence in Macau along with growth in Las Vegas.
Wynn shares rose more than 6% on Wednesday, while fellow Macau operators, Las Vegas Sands (LVS) and MGM (MGM), also traded higher.
Barclays now outweighs all three major Macau operators including Wynn, Las Vegas Sands and MGM Resorts International
Montour wrote in a note, “There is evidence that WYNN’s Macau business is on track for 2019 EBITDA generation faster than (or we think anyone) thought, and sooner we”ll see how much above 2019. “Can talk about.” to the customers.
In the first quarter of this year, Wynn reported $600.1 million in operating revenue for its Macau segment, the highest quarterly reported since the fourth quarter of 2019. Arab in the region. Similarly, the MGM Resorts China segment saw a 140% increase in quarterly revenue over the prior year.
“Macau is coming back quickly,” said Craig Billings, CEO of Wynn Resorts, during the company’s earnings call on May 9.
But the lagging sector has been closely watched due to COVID-19 disruptions in China that have yet to return to normal. MGM Notes Its First Quarter Adjusted EBITDAR [earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs] This represented an 88% recovery from the prior quarter in 2019.
Part of this can be attributed to travel numbers. First-quarter mainland flights to Macau were down 77% of 2019 levels, according to Barclays, while visits from surrounding countries remained below pre-pandemic levels.
This has also reflected in the revenue numbers. Despite Las Vegas Sands’ growth from 2022, Q1 Macau revenue of $1.28 billion is still a far cry from Q1 2019’s $2.33 billion.
“Macao is in its infancy as far as a return to a more normal operating environment,” Las Vegas Sands CEO Rob Goldstein told investors during the company’s earnings call on April 19. day there. This first quarter is still not representative of what could or will happen in Macao. Therefore, I would not call it normal operating mode. And as you mentioned, the revenue acceleration is clearly there and that will drive margin acceleration. ,
People wait outside Wynn Palace, US casino tycoon Steve Wynn’s latest resort, during its opening in Macau, China, on August 22, 2016. Reuters/Bobby Yip
Growing anticipation for a strong Macau comeback comes as Las Vegas traffic has grown exponentially following the pandemic lockdown. Barclays believes the sector may be “more resilient” than it was pre-pandemic, and Wynn appears to be at a strategic advantage compared to other players in the sector. Wynn is outpacing other Vegas operators in room rates, table expenses and slot play, according to Barclays research.
“We are increasingly confident that WYNN will be able to maintain recent property performance in Las Vegas, despite worsening macro conditions, or at least be better than we think given current investor expectations for WYNN’s high are based on the value of a certain level of scarcity. The final product that it should be relatively untouched,”
Josh is a reporter with Yahoo Finance.
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