The 2023 outlook for the gaming sector has many wildcards.For example, the reset of iGaming and sports betting business ratings, rising interest rates, widespread concerns over consumer discretionary spending, and Some casino operators.
Despite the expected choppy backdrop, there are many reasons for investors to make new bets.
Deutsche Bank has selected Wynn Resorts (WYNN) and Las Vegas Sands (LVS) as its top two contenders for the gaming sector in 2023 based on its expectations of profitable growth. Meanwhile, Caesars Entertainment (CZR) and MGM Resorts International (MGM) are also said to have strong years.
“There are certainly reasons to be cautious about the Las Vegas Strip outlook in 2023, but the growth drivers (strength of the group/international visitor returns/event calendar) are relatively compelling, and CZR and We believe both MGM are poised to outperform their peers in their domestic regional markets, given company-specific initiatives and comparisons.”
Within the regional gaming industry, analyst Carlo Santarelli believes relative value will be key in 2023. Red Rock Resort (RRR) tops the list due to its organic growth pipeline and continued expense control in a strong Las Vegas home market. Boyd Gaming (BYD) also gets callouts as a compelling relative way to play groups.
CBRE equity analyst John Decree believes the real story for the Strip is a surge in group and convention business, up 32% year-over-year at the end of October and 20% higher than the 2019 tally. Total visits were 3.6 million, up 7.3% year-on-year and within 1% of pre-COVID levels. DeCree expects the accelerating group and convention business to have a substantial positive impact on his EBITDA, which is part of his CBRE bullish thesis on the Las Vegas Strip in general. Casino stocks with the highest exposure to Las Vegas are MGM Resorts (MGM), Caesars Entertainment (CZR), Visi Properties (VICI), Golden Entertainment (GDEN) and Wynn Resorts (WYNN). Boyd Gaming (BYD) and Red Rock Resorts (RRR) have also been indirectly exposed to strip spillovers.
Meanwhile, Bank of America is increasingly bullish on its Macau unit. Despite uncertainty over China’s economic reopening and geopolitical wildcard, Macau-listed names are expected to see a further 25% rise if EBITDA and valuations fully recover to pre-COVID levels. I’m here. Las Vegas Sands (LVS), MGM Resorts International (MGM) and Wynn Resorts (WYNN) all turned off higher multiples with recovery potential offset by geopolitics and poor prospects for a COVID recovery. was given a higher price target by the company. Other companies have also risen in Macau shares after China’s State Council unveiled a new 10-point plan to ease COVID restrictions and senior officials continue to tone down the virus. New rules include withdrawal of mass testing, quarantine requirements and reduced use of the health code system. Macau’s sector also got a boost recently when current license holders were renewed to remove sector overhangs. Melco Resorts & Entertainment (MLCO), SJM Holdings (OTCPK:SJMHF) and Galaxy Entertainment (OTCPK:GXYEF) are among the top investors to watch for 2023.
Best-performing casino/iGaming/sports betting stocks heading into the new year with some momentum in 2022 include Las Vegas Sands (LVS) +25.2%, Melco Resorts & Entertainment (MLCO) +11.2%, Monarch Casino & Resort (MCRI) +9.8%.
On a valuation basis, Century Casino (CNTY) and Boyd Gaming (BYD) are trading at the lowest price/earnings ratios.
On a Seeking Alpha Quant Rating basis, Buy rated stocks include Light & Wonder (LNW), International Game Technology (IGT), Monarch Casino & Resort (MCRI), Caesars Entertainment (CZR), and Genius Sports (GENI). increase.