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Investing.com -- Seaport Research downgraded MGM Resorts (NYSE:MGM) and MGM China (OTC:MCHVY) to Neutral given a slowdown in Las Vegas and limited upside after a strong run in Macau stocks, even as it raised its Macau gaming forecasts and estimates for several companies.
Macau’s casino industry has shown stronger-than-expected momentum in the second quarter, with Seaport now expecting gross gaming revenue (GGR) to grow 7% for the full year and over 9% in the second half.
The firm said sentiment toward China has improved despite lingering macro concerns, helped by stimulus and recent gains in tourism.
While Macau-focused stocks remain below pre-pandemic valuation levels, Seaport noted that investor attention will shift to the sustainability of recent growth.
It raised price targets across most of its coverage, except for MGM, which it sees under pressure from slower U.S. demand and rising capital spending tied to projects in New York and Japan.
In the U.S., the firm flagged softness in Las Vegas as a near-term concern, though it expects no major downturn in the broader casino market.
Top picks include Melco Resorts, Las Vegas Sands (NYSE:LVS), Sands China (OTC:SCHYY) and Wynn Macau (OTC:WYNMF). Seaport remains positive on Wynn Resorts (NASDAQ:WYNN) long-term, pointing to the potential of its UAE expansion.