Why Citigroup Is Feeling Lucky on These Casino Stocks
Citigroup issued a few calls recently with a particular focus on casino stocks.
Casino stocks were a staple of many portfolios for years, and with the expansion into Macau, China, they were considered a cash cow. However, COVID-19 proved problematic with lockdowns in China and globally. With the pandemic abating and everyone getting back to business as usual, one big brokerage house from Wall Street is betting big again on these casinos.
Citigroup has issued a few calls with a focus on big casinos. Each call is incredibly positive, forecasting massive upside in both the near and long term.
George Choi was the lead analyst on the call, and he made the point that most investors seem to be willing to look past the recent COVID-19 outbreak in Macau and have regained confidence in the eventual EBITDA recovery in Macau. He attributes the positive sentiment change to the “much-lower-than-anticipated regulatory risks” after the Legislative Assembly’s passing of the Gaming Law amendments in June.
Also, China’s decision to half the mandatory quarantine days for inbound travelers “also gets investors excited again,” according to Choi. In the near term, he thinks the license retender, likely to happen in August, could be the next positive catalyst to rerate the Macau stocks “to the next level.”
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Las Vegas Sands Corp. (NYSE: LVS | LVS Price Prediction): Citigroup reiterated a Buy rating and slightly lowered the price target from $57 to $56, implying upside of 61% from the most recent closing price of $34.76. The stock traded around $35 on Friday, in a 52-week range of $28.88 to $52.00. Shares are down over 8% year to date.
Melco Resorts & Entertainment Ltd. (NASDAQ: MLCO): Citi reiterated a Buy rating and lowered the $12.50 price target to $11, implying upside of 87% from the most recent closing price of $5.89. The stock has a 52-week trading range of $4.06 to $16.58, and it traded at over $5 a share on Friday. The stock is down 48% year to date.
MGM Resorts International (NYSE: MGM): Citi reiterated a Buy rating and lowered the price target from $59 to $56, implying upside of 84% from the most recent closing price of $30.36. The stock traded around $30 on Friday, in a 52-week range of $26.41 to $51.17. Shares are down over 34% year to date.
Wynn Resorts Ltd. (NASDAQ: WYNN): Citi reiterated a Buy rating and lowered the $92 price target to $87.50. The implied upside from the most recent closing price of $57.79 is 51%. The stock traded around $57 on Friday, in a 52-week range of $50.20 to $117.88. Shares are down over 34% year to date.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
