US-owned casinos downgraded over Macau risk

Analysts fear revenues will take time to recover in Macau.
Analysts fear revenues will take time to recover in Macau.

Roth Capital Markets has revised its rating for MGM, Wynn Resorts and Las Vegas Sands from “buy” to “neutral”.

Macau.- Financial analysts fear gaming revenues are not recovering fast enough in Macau, and some are downgrading the ratings of US casino operators heavily invested in the city.  

That’s been the case for Wynn Resorts, Las Vegas Sands and in part MGM, which were allo downgraded by Roth Capital Markets from “buy” to “neutral” on Wednesday.  

In the case of Wynn, analyst David Bain noted its peer-high VIP reliance combined with VIP liquidity risks, heightened concession renewal risks for US operators, and lesser Cotai weighting among other reasons for the change in the rating. 

Wynn Resorts was also recently downgraded by Goldman Sachs, which changed its status from “buy” to “hold”, mainly due to the performance of its Macau business. 

Explaining the rating switch for Las Vegas Sands, Bain said Macau market share losses were “likely to continue through CY21,” and that Macau risk factors “have become more acute.”  

He added that visitation is not expected to reach 2019 levels before late 2021, and that the imminent opening of Grand Lisboa Palace, a casino and resort operated by SJM, will likely take some of the interest away from LVS. 

MGM was also downgraded by Roth Capital Markets, mainly due to higher volatility tied to its Las Vegas Strip operations. Bain pointed out that MGM’s Macau concession renewal is also at risk under current US-China tensions. 

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