Wynn Shares Falter Despite Positive Macau News (WYNN, LVS, MPEL, ISLE, MGM, PENN, ASCA)
Shares of Wynn Resorts (WYNN) are plummeting 3% despite news from the operator of the Wynn and Encore casinos that the company will double its profits when it opens a new resort in Macau, the world’s top gambling destination in four years. Chairman and CEO Steve Wynn said in an interview with Bloomberg News that his company could be twice as big in Macau than it is today when the new resort opens.
The comments aren’t doing much to help the Casino Stocks Index, which is down 1.1% today. Along with Wynn, other U.S.-based casino operators have pointed to Macau as the focal point of their international growth efforts. Las Vegas Sands (LVS), operator of the Palazzo and the Venetian, has become a major player in Macau with Chairman Sheldon Adelson saying he wants to recreate the Vegas Strip on Macau’s Cotai Strip, Bloomberg reported.
Gambling revenue on Macau, formerly a colony of Portugal, reached $23.5 billion in 2010, roughly quadruple the revenue seen in Las Vegas. Wynn said Macau will be the primary revenue drive for the company going forward, even ahead of Las Vegas.
Looking at other casino stocks, shares of Melco Crown Entertainment (MPEL), one of the biggest Macau names, are plunging 5%. Isle of Capri Casinos (ISLE), MGM Resorts International (MGM) and Penn National Gaming (PENN) are all off 1%. MGM upgraded to “buy” from “hold” by Jefferies and the research firm raised its price target on the stock to $18 from $16. Ameristar Casinos (ASCA) is fractionally higher after Jefferies raised its price target on that name to $29 from $23.
Investors can track the Casino Stocks Index for performance trends and a suite of other metrics at tickerspy.com.
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