Share rates of Las Vegas Sands (LVS), MGM Resorts (MGM), Wynn Resorts (WYNN) as well as other casinos have all rallied from late July lows, but Wall Street isn’t upping its bet on the sector just however.
Macau has had erratic outcomes this previous year because the Chinese economic climate cooled and tourists held off on trips to China’s gambling mecca due to the uncertain global economic climate.
ISI Group Tuesday initiated coverage on Sands, the most significant Las Vegas casino by income as well as a big casino operator in Macau, having a hold rating and 50 value target.
Last quarter, Sands reported an 8% drop in earnings per share vs. precisely the same quarter in 2011, to 44 cents a share, its very first quarterly EPS decline in three years.
The broker also assigned hold ratings to smaller casinos Penn National Gaming (PENN) and Pinnacle Entertainment (PNK).
ISI initiated coverage on Wynn and MGM with purchase ratings and began laggard Caesar’s Entertainment (CZR), which continues to shed cash, with a sell.
Sands shares fell 1% late Tuesday afternoon.
MGM, which last Thursday announced completion with the $160 million renovation of its MGM Grand hotel in Las Vegas, sank 1.6%. Wynn retreated 1.3%
Penn National fell 1.2%, Pinnacle rose fractionally. Caesar’s tumbled four.2%, hitting a fresh low due to the fact going public once more in February.
ISI analyst Ian Weissman told IBD in an email the Sands hold rating is in portion on account of anticipated softening of gambling spending in Macau amongst high-roller VIP and middle class – or mass market – gamblers.
“Our hold rating is mostly valuation based,” Weissman said. “However, with ISI’s economists calling to get a challenging landing in China, we’ve taken a a lot extra conservative view on growth close to term. Longer term, LVS is most effective positioned to capture the shift mix between VIP and mass,” market.
TheStreet.com reiterated a hold rating on Wynn Tuesday. And last Friday, RBC Capital reiterated an outperform (purchase) rating on Sands, even though Zacks downgraded it from neutral to underperform.
Wynn, meanwhile, escaped a new challenge from former leading shareholder Kazuo Okada, who has been engaged within a bitter fight with Wynn CEO Steve Wynn.
The casino earlier forced Okada to sell his $2.3 billion stake after an internal probe by former FBI director Louis Freeh identified that Okada had allegedly broken U.S. laws.
Okada and Wynn have accused one another of creating improper payments to Asian officials to win share in that industry.
On Monday, lawyers for Okada filed to have a Nevada court overturn the forced redemption. But the court ruled Tuesday against Okada, giving Wynn a legal victory.
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