Earnings Season Starts with High F1 Expectations for Wynn and MGM — CDC Gaming Reports

The gaming industry’s fourth-quarter earnings season begins Wednesday when Las Vegas Sands holds its call with Wall Street analysts and a report suggests Formula One racing will help Wynn Resorts and MGM Resorts beat estimates.

During the earnings call, Zacks Equity Research reported Monday that Las Vegas Sands will likely benefit from higher traffic, higher hotel occupancy, and increased spending in Macau and Singapore during the fourth quarter.

When it comes to Macau, Sean Kelly, a research analyst with Bank of America Securities, said their fourth-quarter revised earnings estimates are in line with Wall Street expectations and they expect a slight win for MGM and a slight loss for Wynn. “Investor sentiment is mixed, as overall gaming and discount revenue trends improving to historical multiples are offset by macro concerns in China and downgrades for Chinese stocks,” Kelly said.

As for Singapore, Kelly said their estimate of $475 million for the Marina Bay Sands project is slightly higher than the consensus.

Zacks Equities Research sounded a positive note for Las Vegas Sands, saying executives are “very optimistic” about growth opportunities in Macau where the company has invested $15 billion. Retail trading likely helped the top line in the to-be-reported quarter, the note said.

Zacks reported that its model for Las Vegas Sands expects net revenues for Venetian Macao, Londoner Macao, Parisian Macao, Sands Macao, and Marina Bay Sands to improve 251.5%, 407.7%, 376.1%, 511.7%, and 52.1% year-over-year. to $706.6 million, $472.2 million, $242.8 million, $104 million, and $1037.1 million, respectively.

Their model also forecasts EBITDA for Venice Macau, London Macau, Parisian Macau, Sands Macau, and Marina Bay Sands of $294.6 million, $139.2 million, $88.2 million, and $22.3 million. And $558 million. Zacks reported that this meant increases of 2,004.6%, 431.4%, 439.4%, 211.5%, and 104.4% year over year, respectively.

A note from Bank of America on Monday discussed the weak third-quarter performance of gaming stocks from the broader market, driven by macroeconomic concerns in China, tepid regional trends, rising cost pressures, and concerns about “corporate consolidation” in Las Vegas in 2024.

“Our estimates for the fourth quarter of 2023 are ahead of the Las Vegas consensus and broadly in line with the regional area and Macau,” Kelly said. “In Las Vegas, we expect Wynn and MGM to win, with Formula 1 and Baccarat providing outperformance. We revised regional estimates slightly higher, as total gaming revenues finished the year well, up 7% year over year, but overall our comps underperformed It is expected due to weak consumer and competition.

Kelley noted that Caesars previously reported Las Vegas fourth-quarter EBITDA of $486 million to $492 million, below previous estimates of $520 million. BofA’s EBITDA estimates for WYNN/MGM are +8%/+4% higher than expected, as they expect it to outperform segment revenue per room and total gaming revenue due to its higher skew.

In regional properties, total gaming revenue in the same state improved during the quarter, and Kelly said the outperformance in December was driven by holiday timing and favorable weather.

“We expect these trends to return in January, and we are already seeing a decline in regional casino visits,” Kelly said. “Overall, our regional revenue/EBITDA estimates are in line, but we expect a slight win for Boyd and Penn and a loss for MGM.”

Kelly wrote that despite unfavorable sports betting results in November, “digital gaming growth tracks 5% ahead of overall market model driven by above-expected gaming growth; online sports betting handles faster-than-expected growth; better-than-expected launch.” In Kentucky.

Kelly also sees total gaming revenue up 11% for DraftKings in the fourth quarter.

“With the launch of ESPN Bet and Fanatics and increased investment behind BetMGM, investors have concerns about promotions, but Penn State data shows that industry-wide promotions as a percentage of handle (excluding ESPN Bet) are actually down 40 basis points compared to last year,” Kelly said. : “General to 2.6%.”