Business earnings begin on Wednesday, with uncertainties surrounding Macau's performance, regional markets, and the Las Vegas sector.
In the upcoming second-quarter earnings season for casinos, analysts are painting a varied picture for the industry's growth. According to Shaun Kelley, a research analyst at Bank of America, the outlook for Macau, regional casinos, and Las Vegas Strip casinos is positive but varies by region and specific markets.
While Kelley expects his firm's second-quarter estimates for regional casinos to be 1% above Wall Street estimates, his projections for Macau are set at 2% above the consensus. However, for the Las Vegas Strip, he anticipates estimates to be below Wall Street expectations, attributed to softer revenue per room.
One of the first companies to release its earnings is Monarch Casino & Resort. Meanwhile, DraftKings is expected to report a second-quarter EBITDA ranging from $250 million to $300 million, with investors leaning towards the higher end.
In the regional casino sector, Kelley estimates that same-store trends are up 1% year over year in early June, with a deceleration driven by a weekend day shift. Notable operators like Caesars and Wynn are showing robust EBITDA growth and improving profitability.
Wynn Resorts, for instance, reported record Q2 EBITDA at Wynn Las Vegas with 14.5% casino revenue growth year over year and a positive outlook for group and convention business going into late 2025 and 2026. The company's stock has risen by $22 over the last month and closed at $111 on Tuesday. Kelley's price outlook for Wynn Resorts is based on a 10x multiple of their 2026 EBITDAR estimate, including value for a resort project under construction in the UAE.
Similarly, Kelley raised the price outlook for Las Vegas Sands to $52.50, Wynn Resorts to $125, and MGM Resorts International to $40. Boyd Gaming has a price target of $95, based on a 7.5x 2026 EV/EBITDAR multiple, while Penn Entertainment has a price target of $20, based on a 7x 2025 EBITDAR multiple.
Digital and technological enhancements continue to improve player experiences and revenues in the casino industry. Online sports betting hold is expected to remain solid, with DraftKings holding at 12% with June data so far. Bank of America has set price targets for several casino stocks, including DraftKings, ahead of their earnings release.
As the casino earnings season kicks off on Wednesday, investors and analysts will closely watch the performance of these companies to gauge the industry's recovery and growth trajectory in the coming quarters.
In the context of the earnings season for casinos, analysts like Shaun Kelley from Bank of America are adjusting their financial projections for various casino sectors. For instance, Kelley anticipates his firm's second-quarter estimates for regional casinos to be 1% above Wall Street estimates, while his projection for Macau is set at 2% above the consensus.
Furthermore, financial analysts will monitor the performance of companies like Wynn Resorts and MGM Resorts International during the earnings season, as they have adjusted price outlooks based on factors such as EBITDAR estimates and technological advancements in the industry.
