Sector Snap: Casinos with Macau properties

AP News
Posted: Jan 04, 2010 11:09 AM

Shares of casino operators with properties in Macau climbed Monday as the latest reports suggest gaming revenue for casinos in the Chinese enclave rose 48 percent last month.

Gaming revenue has steadily improved in Macau since last summer, which has helped casino operators like Las Vegas Sands Corp., MGM Mirage and Wynn Resorts Ltd. as they continue to battle sluggish gaming results in the U.S. Domestic gamblers have pulled back on their spending during the recession, often gambling less, taking shorter trips and frequenting local casinos in attempts to save money.

Robert LaFleur of Susquehanna Financial Group said in a client note that the Macau gaming revenue improvement had been expected because 2008 was hit harder by visa restrictions and the global economic downturn during the latter part of the year.

Macau is the only place in China where gambling is legal.

Separately, Robin Farley of UBS upgraded Las Vegas Sands to "Buy" from "Neutral," saying the casino operator should benefit from the Macau gaming market, which she predicts will grow more than 18 percent year over year in 2010.

Farley boosted Las Vegas Sands' price target to $20 from $19.

Meanwhile, Goldman Sachs' Steven Kent reinstated coverage for the Sheldon Adelson-led Las Vegas Sands with a "Neutral" rating, citing its recent Sands China initial public offering. Kent believes Macau is currently the casino operator's best component, as Las Vegas will likely remain challenging this year due to new supply coming online and ongoing economic concerns.

Kent provided a $16.25 price target for Las Vegas Sands.

The company's stock added 99 cents, or 6.6 percent, to $15.93 in morning trading. The shares have traded between $1.38 and $20.73 over the last year.

Farley also raised Wynn's rating to "Buy" from "Neutral" on its attractive stock price. The analyst noted that the company, which is based in Las Vegas along with Las Vegas Sands, has seen its stock price drop 11 percent since Dec. 4. She maintained a $76 price target.

Wynn's stock gained $3.41, or 5.9 percent, to $61.64. The shares have traded in a 52-week range of $14.50 to $74.90.