ank of America lowered its target for Sands, the biggest Vegas casino company by revenue, from 65 to 60, and cut its target for Wynn from 140 to 130, but kept a buy rating on both companies.
Shares of big Vegas casinos have run up significantly the past couple of years, primarily due to expansion in Macau, the world's fastest growing gaming destination. But the bank said revenue from Macau operations isn't growing as fast as anticipated. And although Las Vegas has largely recovered from the 2008-09 recession, business from casinos in America's favorite gambling city is less than robust as cautious consumers keep a lid on discretionary spending.
Gaming revenue in Macau, a former Portuguese colony, rose to us$ 33.5 billion last year and JPMorgan Chase (JPM) earlier this year projected it could climb as much as 22% this year.
The only legal casino gambling region in China, Macau is growing rapidly as it draws middle-class tourists from China and elsewhere, and VIP gamblers from around the globe.
Bank of America's report specifically cited softness in Wynn's so-called VIP, or high-roller, game revenue in Macau, and slower-than-expected initial growth for Sands' us$ 4 billion Cotai Central casino, which opened April 11.
The bank lowered its second-quarter earnings estimate for Sands to us$ 888 million from us$ 937 million, and dropped its estimate for Wynn to us$ 362 million from us$ 388 million. Sands shares fell 0.5% to 44.52 in afternoon trading Friday. Wynn rose 0.7% to 102.72.
MGM Resorts, which is third of the big three Vegas casinos but lags Sands and Wynn in profit and sales growth, rose 0.3% to 11. MGM last month reported a first-quarter loss of 44 cents, its 14th straight quarterly loss, citing higher expenses.
MGM is counting on growth in Macau to lift its results, CEO Jim Murren said at the time, as "we continue to focus on online and social media initiatives, and are finalizing our build-out for MGM Macau and our future Cotai plans."