LVS - Are casino stocks at risk after Jefferies downgrades two names?
2023-06-12 09:15:09 ET
The casino industry has experienced tremendous growth in recent years, and several companies highlight the potential for even better times ahead. Digitization and regulatory changes have paved the way for gaming companies to diversify their operations and offer attractive gaming products on the market.
But on Thursday, analysts at Jefferies parted ways with their bullish stance on two notable names in the sector. The equity research firm downgraded shares of Las Vegas Sands ( NYSE: LVS ) from Buy to Hold with a price target lowered from $69 to $65. Rival casino operator Wynn Resorts ( NASDAQ: WYNN ) was also slashed from Buy to Hold while its price target was lowered from $135 to $114.
‘Upside less compelling’
Jefferies analyst David Katz wrote in his note that the upside potential in both names is “less compelling.” But, a bearish stance on the sector can’t be justified at this time as the analyst notes that “Macao recovery should remain productive.”
Wynn shareholder and CNBC contributor Jim Lebenthal commented on Thursday that despite a downgrade, he feels “pretty good” about Wynn’s outlook. He said that gross gaming revenue and visitor statistics to Macau remain “pretty good.”
Best Casino Stocks 2023
We’ve compiled a list of the best casino stocks to keep an eye on in 2023. Note that some are Swedish and some foreign. Several of them operate casinos without a Swedish license but use local licenses such as MGA, Estonia or Curacao. However, this does not mean that all casinos without a Swedish license accept Swedish players .
Las Vegas Sands (LVS)
Las Vegas Sands is one of the largest players in the casino industry, and they have had a long history of successful operations. They are known for their iconic casinos such as the Venetian and the Palazzo in Las Vegas. With their strong market position and wide range of businesses, we can expect Las Vegas Sands to be a solid investment also in 2023. The stock’s yield for 2023 is currently 22.51%.
Betsson (BETS B)
Betsson is a Swedish company with extensive experience in the gaming industry. They offer both casino games and sports betting and have expanded their operations internationally in recent years. Betsson has a stable history of growing revenues and good profitability, which makes the stock very attractive for investors who want to bet on gaming companies in 2023. BETS B is up 26.70% this year.
DraftKings (DKNG)
DraftKings is one of the most popular companies in fantasy sports and online betting. They have also begun to focus on the growing casino gaming market, making them an interesting stock to watch. With their strong brand and rapid expansion, we can expect DraftKings to continue to grow and develop in 2023. Already this year, the stock is up 128.09%.
Gaming Innovation Group (GIG)
Gaming Innovation Group is a company that focuses on offering platforms and solutions within iGaming, including for casinos and sports betting. They have a strong presence in Europe and are constantly looking for new opportunities for expansion. GIG is an interesting stock for investors who want to invest in companies that are at the forefront of technological development in the gaming industry. The GIG stock has moved sideways this year and is down 0.8%, but looking at 1-year performance, it is up 52.65%.
Better Collective (BETCO)
Better Collective is a leading player in affiliate marketing in betting and casino. They offer innovative solutions and services to help gaming companies reach and engage players. With a constantly growing market and an increased demand for effective marketing solutions, Better Collective can become an interesting choice for investors in 2023. BETCO is up a whopping 77.28% for this year.
International Game Technology (IGT)
International Game Technology (IGT) is a global provider of gaming machines, systems and services for casinos and lotteries. They have a strong brand and a broad portfolio of products, which makes them an attractive investment. IGT has shown stable growth and profitability over the years, making them a safe investment for 2023. The yield for 2023 so far stands at 18.74%.
MGM Resorts (MGM)
MGM Resorts is one of the world’s largest casino and hotel chains, with well-known establishments such as the Bellagio and the MGM Grand in Las Vegas. They have also invested in digital casinos and sports betting, which bodes well for their future growth opportunities. MGM Resorts stock could be a good investment for those looking to bet on the global casino industry in 2023. This year it has already returned 23.24%.
Evolution (EVO)
Evolution is a leading provider of live casino games, with a strong market position and an innovative range of games. They have experienced significant growth in recent years, driven by increased demand for live casino games and strong global expansion. Evolution stock should definitely be considered by investors looking to bet on the growing live casino market in 2023. Evolution is one of the best performing gaming company stocks in 2023 with a whopping 39.59% return.
Kindred (KIND SDB)
Kindred is one of the largest online gaming companies in the world, with operations in both casino games and sports betting. They are known for their Unibet brand and have a long history of innovation in the gaming industry. With its strong brand and sound financial position, Kindred is an interesting stock for investors to watch in 2023. The stock is up 13.08% this year and has a positive trend.
camp (camp)
Kambi is a leading supplier of sports betting solutions and services to betting companies worldwide. They are particularly known for their innovative platform and high-quality technology, which makes them an interesting investment for those who want to bet on the fast-growing sports betting market. Kambi stock could be a good choice for those looking for growth opportunities in the gaming sector in 2023. Kambi has at the time of writing had 8.56% return this year.
Conclusion
Casino stocks have performed well so far and as our analysis, plus the latest trends in the industry show, several companies look well on track for more gains. Indeed, casino stocks are outperforming the broader market. The S&P 500 index is up roughly 12% year-to-date, while the S&P 500 Casinos & Gaming Sub industry index is up 20%.
Meanwhile, individual casino stocks such as Las Vegas Sands Corp. (LVS) is up 16% year-to-date; MGM Resorts International (MGM) is up 24% YTD and Betsson AB (BETS) is up 24% over the same period. Better Collective (BETCO) has rallied 77% for the year, while DraftKings Inc. (DKNG) has outperformed most peers, ripping 129% year-to-date.
The outperformance is down to a number of factors, including growth across the online gambling market and the benefits of new technologies such as cryptocurrency and metaverse. Digitization and an improving regulatory environment have also been key drivers of casino sector growth. But while the reopening of casinos and the resulting growth, investors need to understand that investing in casino stocks, like other investments, needs one to do their own research and risk analysis before investing.
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