Four casinos came into the spotlight on Wall Street when Brean Capital issued Buy ratings for them. Las Vegas Sands Corp., Wynn Resorts Ltd., MGM Resorts International, and Melco Crown Entertainment Ltd. were the casinos favoured by the investment bank.
The buy rating comes at a time when the casino stocks are more or less off their 52-week highs. The rating was issued, according to Brean, because they expect revenues to increase in Macau in the latter half of this year. Gaming revenues had gone down in the second half of 2014 and have also gone down in the current quarter of 2015, mainly because of the crackdown on anti-corruption brought about by China’s President Xi Jinping.
However, the company says that the reports are over exaggerated and another issue was the lack of room to handle the increased mass market visitation. Brean also sees the upcoming expansion of Galaxy and Melco’s Studio as another reason to reverse the trend of decreasing revenues.
For the concerned stocks; the price targets issued by Brean range from 17 percent to 36 percent upside. The general consensus is that there will be an upside, but not as high as it the company’s estimates. However, it is not only Brean Capital who have issued such high upsides; there are other analysts who have, in fact, issued even higher upsides.
The target price for Las Vegas Sands, according to Brean, is $65, while the same is $28 for Melco, $27 for MGM, and $174 for Wynn. While these are well above the consensus targets, as already mentioned, there are analysts who have estimated even more optimistically. Irrespective of who you think is right, everyone seems to be of the opinion, which is backed by their respective stances on the issue, that there is money to be made by betting on casinos.