Summary:
- Bank of America analysts expect Macau and other regional casinos to post strong quarterly results.
- The Las Vegas Strip, however, may continue to underperform.
- Boyd, Caesars, Wynn, MGM, and other big players are set to report earnings between now and August 7.
It’s that time of the year again when the most popular publicly traded sports betting and casino operators are getting ready to put their quarterly earnings on full display for the public.
Starting Wednesday, investors will get a clearer look at how regional casinos are doing and whether the Las Vegas Strip is finally showing signs of a comeback.
As the results start to come in, Bank of America analyst Shaun Kelley provides a comprehensive analysis, describing the current results state as mixed.
Kelley is concerned about the Strip’s hotel rates and revenue but strongly believes in Macau’s recovery, as well as the solid trends embraced by regional casinos, and the momentum enjoyed by online sports betting.
Our second-quarter estimates are slightly below the Street, driven by softer revenue per room (room rate survey was down 11%) on a forward rolling-three-month basis. We’re more cautious on the Las Vegas Strip and are 1% below the Street, noting that our monthly shows a very soft June across metrics.
Unexpected Results
Some regional operators appear to be outperforming expectations, with special emphasis on Boyd Gaming’s Midwest and South properties, which are estimated to be running about 6% ahead of forecasts.
Caesars has also done well in its core markets, even though some weakness has been observed at its properties in Tahoe and Mississippi.
Macau, meanwhile, seems to have turned over a new leaf, with investors becoming “much more constructive on potential second-half growth”, explained Kelley while citing VIP-influenced revenue gains for the months of May and June.
The same analysis raised his forecast for Macau gaming revenue by 5% for the rest of the year.
As expected, DraftKings keeps standing out thanks to strong online sports betting trends and minimal promotional spending. The giant is looking forward to a second-quarter EBITDA between $250 million and $300 million, after taking into account around $90 million in added costs from the launch in Missouri and the higher tax rates.
Three Weeks of Upcoming Reports
Over the course of the upcoming weeks, reports will start to arrive, with Monarch Casino & Resort going first.
Las Vegas Sands, which has yet to announce its date, is usually one of the first Strip operators to publish its results.
Boyd and Churchill Downs report on July 24, Caesars and Red Rock Resorts follow on July 29, MGM Resorts is up on July 30, and Wynn, Penn Entertainment, and Full House wrap things up on August 7.
Bank of America also updated price targets ahead of earnings, raising Wynn Resorts to $125, Las Vegas Sands to $52.50, MGM to $40, and DraftKings to $50. Kelley said Wynn’s luxury appeal and Macau recovery are driving its gains, while DraftKings continues to stand out as a leader in online betting.
“The second-quarter setup appears favorable”, Kelley said, adding they would not be taken by surprise if estimates went even higher.
About the Author
