Casino gaming stocks, US

Macau gaming stocks rallied on the US Exchanges on the sentiment of the anticipated business boom following the announcement made on Saturday by Macau Chief Executive Ho Iat Seng for the beginning of issuing eVisas and tours to restart, which is expected to boost the visitations from Mainland China to Macau.

Another factor triggering the momentum in the prices of Macau casino shares is the current gaming license tendering process.

Though there are clouds of uncertainty with seven competitors for six gaming licenses, Macau gaming stocks rallied on Monday on US Exchanges gaining a slot in the top five gainers.

Las Vegas Sands shares closed 12 percent up at $39.66 per share from its previous close of $35.47 per share on Friday, gaining momentum of $4.19 per share.

While the Las Vegas Sands stock was already rising in pre-market hours, following the easing of travel restrictions news, Jefferies quickly upgraded the stock to “Buy” and highlighted the scale of the opportunity ahead for Las Vegas Sands in Macau, leading shares even higher. 

The brokerage also raised the target price of Las Vegas Sands to $50 from a previous price target of $40.

The firm’s analyst David Katz said that the news of Macau easing restrictions necessitated an “immediate rerating of shares” despite significant questions remaining, a report read.

Whereas Melco Resorts & Entertainment shares closed 25 percent up at $6.65 per share, from its previous close of $5.3 per share, on Friday, recording gains of $1.35 per share.

Wynn Resorts shares closed at $66.80 per share, a spike of 12 percent from its previous close of $59.65 per share on Friday, marking a gain of $7.15 per share.   

The prime reason for the surge in the Macau-linked casino stocks having moved higher in premarket trading on Monday was the announcement from Macau authorities for an e-visa for mainland travelers and tour groups to be allowed soon again to visit the gambling hub.

Jefferies’ report specifically mentioned that the longer-term global fundamental outlook for Macau is questionable given the economic outlook, which is drifting to more negative.

Still, the environment was enough to add incremental multiples to the EBITDA, price-to-earnings and free cash flow estimates, triggering the brokerage’s view on Las Vegas Sands and Wynn to the bullish side of its books of accounts.