© Reuters. Caesars Entertainment and MGM Resorts remain top picks at Macquarie
In a note to clients this week, Macquarie Research analysts reiterated MGM Resorts (NYSE:) and Caesars Entertainment (NASDAQ:) as their top picks in the Vegas-exposed gaming industry.
Focusing on the industry’s performance in November, the analysts who led the rating said that the Vegas strip generated $821 million in revenue in November (+23% year-over-year), the third highest GNP total on record and a new record for November.
As a result, the investment research firm expects the Vegas segments to exceed expectations in the fourth quarter by mid-single digits, driven by strong growth in RevPar and GGR.
The company has an Outperform rating on CZR ($62 price target) and MGM ($58 price target). “We expect the Vegas segments to exceed expectations in Q4 by mid-single digits, assuming similar market shares for MGM, CZR and WYNN and minimal disruptions from cyberattacks,” the company wrote. analysts.
“Given the Strip’s strong results in November, we are increasing our Q4 Strip GDP forecast to +8% YoY (from -1% YoY), implying +6% GDP growth % in 2023,” they added.
The company sees the November results as progressively positive for Strip operators compared to current expectations, with the biggest surprise coming from the increase in GGR on tables/bacc and likely driven by premium F1 customers (among others events like U2 concerts at the Sphere).
They note that the month’s results are also consistent with recent comments from MGM management that F1 attendance of more than 300,000 people led to the most profitable weekend for MGM’s hotel revenue.
“We maintain that the future remains bright in Vegas with the addition of recurring events like F1 and Sphere and potentially MLB, which not only generate additional hotel revenue but can be drivers of GGR growth in 2024 and beyond,” the analysts said. “The November results also make for a positive reading for 1Q24, which includes Vegas hosting the Super Bowl.”