Wynn Resorts
and
Las Vegas Sands
shares are falling Thursday. Jefferies downgraded both gaming and lodging companies, saying the shares have already priced in the Macau recovery.
Jefferies analyst David Katz downgraded both Wynn stock (ticker: WYNN) and Las Vegas Sands stock (LVS) to Hold from Buy on Thursday. Katz also lowered his price targets to $114 and $65, respectively, from $135 and $69.
“We believe the bull-case arguments for growth in both cases remain, and while the recovery in Macau remains early stage, we believe these dynamics are relatively well understood by the market and approximately priced in at present levels,” Katz wrote in a research note.
Wynn’s Macau operations accounted for first-quarter revenue of $600.1 million, 42% of total revenue of $1.42 billion. That is its highest post-pandemic quarterly Macau revenue figure. Las Vegas Sands derived even more from Macau in the first quarter, $1.28 billion, or 60% of total revenue of $2.12 billion; it noted a “robust recovery in travel and tourism spending is now underway in both Macau and Singapore.”
Wynn stock is down 2% in Thursday trading to $101.40, while Las Vegas Sands stock is down 1.8% to $57.43. Wynn stock has jumped 22% so far this year, while Las Vegas Sands stock has climbed 19%.
Casino stocks with exposure to Macau had struggled during the pandemic as China implemented strict lockdowns and travel restrictions. In recent months, the sector has surged after the reopening of Macau and gamblers came flooding back.
Katz wrote that current owners of these shares shouldn’t sell, “given that the Macau recovery should remain productive for both LVS and WYNN.”
“However, our ultimate point is that we consider the upside less compelling at
present levels than at the time of our upgrade,” he wrote. Katz had upgraded both names to Buy in September 2022.
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was originally published here.
