Macau gaming stocks rallied on Wednesday after a 33% year-over-year increase in gross gaming revenue was reported for February. The GGR tally also represented a 40% recovery from the pre-pandemic level in 2019.
CBRE Equity Research analyst John DeCree thinks the momentum in Macau may be better than what is currently represented in consensus estimates. He said given where GGR is tracking today, and with the expectation for a continued ramp in the recovery throughout the year, CBRE believes the 2023 GGR consensus forecast is likely conservative.
"Considering the mix shift to mass and premium mass (from VIP), we expect continued margin expansion as revenue recovers, likely putting the EBITDA recovery ahead of the revenue recovery in 2023 and beyond. Ultimately, we see the opportunity for a series of upward estimate revisions throughout the year as the recovery picks up momentum."
Of note, the Macau government lifted its outdoor mask policy at some indoor venues to mark more incremental progress in returning to normalcy.
CBRE has Buy rating on Las Vegas Sands ( NYSE: LVS ) +2.38% , Wynn Resorts ( WYNN ) +3.01% , and MGM Resorts ( MGM ) +2.28% due to their Macau exposure through subsidiaries.
The leader in the Macau sector in Wednesday morning trading was Melco Resorts & Entertainment Limited ( MLCO ) with a 4.37% jump. Melco reported earnings early in the day that included strong results from Philippines and Cyprus.
Read more about the February Macau gross gaming revenue report.
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Melco Resorts, Wynn and Las Vegas Sands rally as confidence in Macau casino stocks grows