Las Vegas Sands and Wynn Shares Mixed as Wall Street Sentiment Sours on Macau – Barron’s

Macau's government is reviewing casino concessions, weighing on U.S-based operaters with a big presence in the Chinese enclave. Here, a light, water, and sound show at the Wynn Palace casino in Macau. Isaac Lawrence/AFP via Getty Images

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Analyst sentiment on Las Vegas Sands and Wynn Resorts continues to deteriorate over concerns that impending casino concession renewals in Macau will be more onerous.

However, stocks of U.S. casino companies with ties to Macau were mixed Friday morning. Las Vegas Sands (ticker: LVS) was up 1% in early trading; Wynn (WYNN) was off 0.6%; and MGM Resorts International (MGM) up about 1%.

The casino concessions allowing companies to operate in Macau are set to expire next June. Earlier this week, members of the Macau government said that they were beginning the process of reviewing the concession renewals and examining a law that oversees that business. The Macau government said in part that by revising the law, it expects to strengthen supervision of the holders of those casino concessions.

Against this backdrop, Jefferies analyst David Katz on Friday downgraded Las Vegas Sands to Hold from Buy, partly owing to the pending uncertainties around the Macau concession and its growth and return prospect.

For U.S. investors, one of the biggest concerns about these companies is that the new concessions will be much less favorable in terms of taxes, capital spending mandates and local ownership requirements, among other things.

While Las Vegas Sands and Wynn are both based in Las Vegas, more than half of their revenues come from Macau in normal times. Macau is the worlds largest gambling market.

In his note downgrading Las Vegas Sands, Katz also cited the persistent restrictions from Covid, which could continue in a zero-tolerance context.

He already had a Hold rating on Wynn but lowered his estimates and dropped his price target to $83 from $104.

The recent developments in Macau around concession renewals implied tighter restrictions on the gaming industry going forward, Katz wrote.

The stock closed at $84.37 on Thursday, down about 17% for the week. Las Vegas Sands was off about 10%.

MGM Resorts International , which has a presence in Macau but is more focused on U.S. properties, was down about 2% this week through Thursday.

Write to Lawrence C. Strauss at lawrence.strauss@barrons.com

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Las Vegas Sands and Wynn Shares Mixed as Wall Street Sentiment Sours on Macau - Barron's