Unbiased, Uncensored Guide to U.S. Commercial Casinos
Pessimistic Forecasts by Analyst Regarding Casino Stock Prices Due to Economic Concerns
Let's dive into the current state of the commercial casino market in the good ol' US of A, taking a no-holds-barred approach to the analysis.
The Bleak Outlook from Jefferies Equity Research Analyst, David Katz
Perhaps it's best to start with renowned analyst David Katz, who recently issued a grim view of the gaming sector's future in a grim April 17 investor note. Simply put, he's seen better days. The guy's not impressed with the pathetic five percent rise of gaming stocks since the start of 2020 while the broader market went on a wild 65 percent ride.
Katz starts us off in Macau, where revenues have been languishing 20 to 25 percent below their pre-plague levels and Q1 wraps up a disappointing 25 percent lower than Q1 '19. As a result, he lowered his projections for industry heavyweights, Las Vegas Sands and Wynn Resorts.
But things don't end here - the escalating trade war looms large. Katz warned that the question on everyone's mind is not if but how much impact it'll have on the market. His research suggests that Macanese officials are expecting near-term damage from the trade tussle between China and the States, stirring up uncertainty around the impact on U.S.-traded operators.
Over to Vegas, Katz isn't feeling too hot about Caesars Entertainment. Volumes, pricing, and margins are just as expected, he notes, but the key concern now is the outlook for international inbound travel and group business.
Moving further afield to regional casinos, Katz predicts more of the same - competitiveness and instability. He's lowered his forecasts for companies such as Boyd Gaming, Station Casinos, Churchill Downs, and Caesars. The regional scene remains a battleground, he notes, especially considering the impact of tariffs on materials and the ongoing debate about digital strategies.
Taking Stock
Katz also shared his price target tweaks for six large-cap gaming stocks. Let's just list the new targets and whether they're looking expensive or like a steal:
- Boyd Gaming: $86 - Looking like a solid investment?
- Station Casinos: $41 - Is it time to cash in?
- Las Vegas Sands: $53 - Bargain or gamble?
- Wynn Resorts: $111 - A safe bet?
- Churchill Downs: $160 - Overpriced or a winner?
- Caesars Entertainment: $36 - Considering a flutter?
There you have it, folks. Stick with us for more unfiltered insights into the world of U.S. commercial casinos. Just remember: every rose has its thorn, every gambler's game, and every deal's a trap for the unwary. Happy betting!
Enrichment Insights:
- Online Gaming: The U.S. online gaming market is on the rise, with projections of reaching $54.8 billion by 2029. But land-based gaming isn't faring as well, with a decline in slot and table game revenues.
- Las Vegas: The city remains a beacon for both brick-and-mortar casinos and overall entertainment. Despite Katz's bearish outlook, an emphasis on experiential travel could boost business.
- Macau: An analysis by David Katz was not found, but historically, Macau has been a powerhouse in the global gaming industry. Its local market dynamics, regulatory environment, and casino culture offer unique challenges and opportunities.
- Jefferies Equity Research Analyst, David Katz, expressed a pessimistic view about the gaming sector, particularly for sports-related activities, given the impact of the ongoing trade war and the uncertainty it brings to U.S.-traded operators.
- In his research, David Katz lowered his projections for industry heavyweights such as Las Vegas Sands and Wynn Resorts, noting that revenues in Macau, a key market, have been 20 to 25 percent below pre-pandemic levels.
- Katz also predicted a competitive and unstable environment for regional casinos, such as Boyd Gaming and Caesars, due to tariffs on materials and the ongoing debate about digital strategies.
