Macau Casino Stocks Have Favorable 2025 Setup, Says Analyst

Last year was a mostly tepid one for Macau casino stocks and with the December and 2024 gross gaming revenue (GGR) report released earlier today similarly lukewarm, some investors may not be enthusiastic about these stocks to start 2025. However, at least one analyst believes the group is ripe for upside this year.

In a new report to clients, Stifel analyst Steven Wiecyznski said market participants have more than adequately priced in concerns regarding the macroeconomic climate in China and Macau gaming equities could deliver upside this year.

We believe the setup is compelling for Macau-centric names heading into 2025. Stocks massively underperformed our coverage universe not only in 2024 but also since the pandemic kicked in. China macro fears remain the primary culprit as to why investors don’t want to revisit this group,” wrote the analyst. “However, based on current trading levels, we believe the market has priced in more than enough China macro pressures (as well as a Trump administration) at this point.”

Data released earlier Tuesday indicate Macau operators in GGR last year, a 24% year-over-year increase.

Based on percentages of earnings and revenue, Las Vegas Sands (NYSE: LVS) and Wynn Resorts (NASDAQ: WYNN) are the largest US-listed Macau operators and the stocks were laggards last year with the former gaining just over 4% while the latter shed more than 5%.

Despite , Wieczynski believes the Wynn Macau parent can rebound this year, potentially outperforming rival Sands because Wynn Macau’s client base is less sensitive to goings on in China’s economy than Sands China, which derives a significant percentage of its revenue from mass market customers.

“We believe WYNN’s relative premium mass exposure will help them be less sensitive to macro pressures whereas LVS is more dependent on bass mass visitation,” added the analyst. “We aren’t sitting here and trying to say a weaker China macro backdrop won’t impact Macau visitation/spend levels, but we would argue the market has already priced in a greater impact versus what will be observed.”

Wieczynski added that in the case of Wynn, that could be pulled this year, and other Macau casinos stocks, it’s been awhile since these equities tempted investors, 2025 could be the year in which that temptation is warranted, and “the risk/reward is too intriguing to pass up.”

Underscoring the 2024 disappointment served by Macau gaming equities is the point that group typically moves in unison with GGR. Gaming revenue in the Chinese territory surged last year, but stocks didn’t follow suit.

It’s possible that scenario reverses this year because Macau’s 2024 GGR tally was 80% of the pre-coronavirus level, indicating there’s room for more growth in 2025.

“We believe investors need to focus on what the full-year 2025 could look like from a recovery/growth standpoint and believe consensus estimates could end up being conservative,” concluded Wieczynski. “Trying to model out the next six to twelve months does remain challenging given what is happening with government stimulus etc. We assume 1Q25 shows a 7%-9% y/y acceleration followed by an 8%-12% acceleration for 2Q25. At this point we believe full-year 2025 GGR should see growth in the range of 4%-10% over 2024.”