In a recent report, analysts at Morgan Stanley cut their 2015 revenue outlook for Macau and adjusted their expectations for three gaming names in the space.
Analysts believe that Macau’s negative momentum is too much for the stocks to overcome in the near-term.
Catalysts Hard To Find
According to the report, Macau gaming stocks are suffering from a lack of near-term positive catalysts to shift Macau’s momentum. Back in December, Morgan Stanley analysts advised investors to wait until mid-2015 to own Macau names and upgraded Wynn Resorts, Limited WYNN 0.85%.
However, in the new report released this week, analysts explain that they were early on the Macau turnaround call and still see very little visibility in the space.
“It appears we misjudged the extent of the near-term headwinds (the full effect of which we may not have even fully yet reflected) and we should have stuck to our initial cautious stance,” analysts wrote this week.
Wynn Not Able To Overcome Macau Woes
While analysts point out that Wynn has gained market share and is an “attractive multi-year story” because of its new Cotai property opening in 2016, they no longer believe that Wynn’s performance is enough to overcome the overall Macau decline.
Analysts cut their forecast for 2015 overall gross gaming revenue (GGR) growth in Macau from -7 percent to -25 percent. About 77 percent of Wynn’s equity value comes from Macau.
Outlook
Analysts downgraded Wynn from Overweight to Equal-weight and lowered their target for the stock from $185 to $145.
Morgan Stanley also lowered its targets for Overweight-rated MGM Resorts International MGM 10.58% from $28 to $25 and Equal-weight-rated Las Vegas Sands Corp.LVS 0.81% from $58 to $53.
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