Sands and Wynn Considered Best Casino Stocks for 2024
As some domestic casino operators face challenges in 2024, Las Vegas Sands (NYSE: LVS ) and Wynn Resorts (NASDAQ: WYNN ) could be gaming stocks in the new year winner.
That's the outlook from Deutsche Bank analyst Carlo Santarelli, who highlighted Sands Corp. and Wynn Corp. as his top casino stocks for 2024 in a new client note. His price target for Wynn is $124, which would imply a nearly 44% gain over the next year. His price forecast for LVS is $65, which implies a potential rise of 36% in 12 months.
The analyst's bullish thesis on the two casino stocks stems from Macau, where the operators' Chinese subsidiaries operate a total of seven integrated resorts.
We see the clearest path to growth and upward revisions here (Macau), with valuations more attractive than they have been in a long time," Santarelli wrote.
The analyst noted that fundamental and macroeconomic headwinds, including capital spending in Macau and a weakening Chinese economy, have been priced into LVS and Wynn's share prices. Additionally, periods of economic slowdown in China rarely have a negative impact on Macau's gross gaming revenue (GGR).
"Best Opportunities" in Casino Stocks
Among U.S. non-tech companies, Sands Corp. and Wynn Corp. are among the companies most exposed to China, but that could be a good thing for 2024.
Currently, LVS does not operate domestic casino hotels. Wynn, meanwhile, operates its namesake hotels on the Las Vegas Strip and Encore Boston, but the company relies on Macau for most of its profits and sales. This could be beneficial given expectations that U.S. consumers will spend less on gambling next year.
“We expect this to be a challenging base year for domestic same-store operators, with earnings before interest, taxes, depreciation, amortization and restructuring or lease costs (EBITDAR) difficult to achieve. “However, we believe Valuations largely reflect this, with consensus forecasts predicting a slight slowdown in the economy, which provides some opportunities," Santarelli noted.
The operators' focus on markets outside the U.S. is why Sands and Wynn could be the casino stock frontrunners in 2024.
"We believe WYNN and LVS offer the best opportunities to outperform in 2024," the Deutsche Bank analysts added.
For Sands and Wynn, achievable goals
Santarelli said another reason LVS and Wynn will be among the best-performing casino stocks in 2024 is that the operators' consensus revenue and profit expectations are "reasonable and achievable."
That comes as shares of the Macau franchisee trade at rock-bottom valuations, according to some analysts and investors. Despite the significant rise in GGR in 2023, Macau operators' share prices, with the exception of MGM China, are currently still well below where they were at the start of the year.
“Sands and Wynn have reached ‘normal’ Zed trading levels and earnings have normalized,” Santarelli explained.
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Source: www.casino.org
