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Msg  26 of 27  at  2/9/2023 3:48:02 PM  by

jerrykrause


MGM and Wynn Stocks Surge After Earnings. 'Macau Is Back.'

 

MGM and Wynn Stocks Surge After Earnings. 'Macau Is Back.'

Palumbo, Angela.  Barron's (Online); New York
 

MGM Resorts International and Wynn Resorts stocks were climbing Thursday after both casino companies cited confidence in the reopening of operations in Macau.

Shares of MGM (ticker: MGM) jumped 7.2% Thursday to $44.40 and were on pace for their highest close since February 2022, according to Dow Jones Market Data. Shares of Wynn (WYNN) surged 4.5% to $108.30 and were on pace for their highest close since July 2021.

MGM reported a fourth-quarter loss of $1.53 a share on revenue of $3.59 billion after the close Wednesday. Analysts surveyed by FactSet were expecting the casino giant to report a loss of $1.45 a share on sales of $3.35 billion. Last year, MGM posted earnings of 12 cents a share on sales of $3.06 billion.

Las Vegas Strip resorts revenue climbed 27% to $2.3 billion in the quarter as more people traveled to the gambling capital of the U.S., while revenue in China fell 44% from the prior year to $175 million amid negative affects from Covid-19 lockdowns in the country.

Macau, which hosts many casinos, was hit hard by strict Covid-19 lockdowns last year . Recently, Macau has lifted those restrictions , and MGM Chief Executive William Joseph Hornbuckle said on the company's earnings call that "Macau is back."

"We are experiencing a rebound in 2023 as our guests are returning in force just as they did in Las Vegas when restrictions were lifted here," he said. "In fact, quarter to date, we're excited to report that MGM China's combined properties are the highest earning businesses within our company."

Wells Fargo analyst Daniel Politzer increased his 12-month price target to $58 from $54 and reaffirmed his Overweight rating on the stock. He views MGM as "the best way to gain exposure to the Las Vegas Strip, which is still in the middle innings of its recovery and should further benefit as group/convention business fully returns in 2023."

Wynn also reported earnings after the closing bell Wednesday. The casino company reported a fourth-quarter adjusted loss of $1.23 a share on revenue of $1 billion. Analysts surveyed by FactSet were expecting a loss of $1.17 a share on revenue of $954.5 million. Wynn Macau's revenue of $77 million fell from last year's revenue of $131.7 million in the quarter, but the company said that Lunar New Year celebrations this year were strong, giving them confidence on recovery.

"Recent actions by both Macau and Mainland authorities to reopen the market give us great confidence that the difficulties are behind us and the near-term future there much brighter," Wynn Chief Executive Craig Billings said on the earnings call.

JPMorgan analyst Joseph Greff increased his price target on Wynn to $131 from $103 and maintained his Overweight rating on the stock. He wrote in a research note that he believes "WYNN (still) remains an attractive mid-cap way to play the China re-opening/Macau recovery and while the shares have had a good run, we would point out that the Macau recovery is in its early innings."



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