Stocks Of MGM And Wynn Rise Following Earnings. ‘Macau Is Back.’

The stocks of MGM Resorts International and Wynn Resorts rose on Thursday after both casino businesses expressed optimism about the resumption of business in Macau.

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According to Dow Jones Market Data, stocks of MGM shares soared 7.2% to $44.40 on Thursday and were on track for their best closing since February 2022. Wynn shares increased 4.5% to $108.30 and were on track for their best closing since July 2021.

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MGM reported a fourth-quarter loss of $1.53 a share on revenue of $3.59 billion after the close Wednesday. Analysts polled by Trade Algo anticipated the casino giant to report a loss of $1.45 per share on $3.35 billion in revenue.

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As more individuals traveled to the gambling capital of the United States, the Las Vegas Strip resort's revenue increased by 27% to $2.3 billion in the third quarter, while revenue in China decreased 44% from the previous year to $175 million as a result of Covid-19 lockdowns.

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Macau, home to numerous casinos, was severely affected by rigorous Covid-19 lockdowns last year. Recently, Macau abolished these prohibitions, prompting MGM CEO William Joseph Hornbuckle to announce on a conference call saying "Macau is back." 

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"Our customers are coming in droves in 2023, just like they did in Las Vegas after limits were eased," he said. In fact, quarter-to-date, the combined properties of MGM China 2282 +9.17% are the highest-earning businesses inside our organization.

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Daniel Politzer, an analyst at Wells Fargo, raised his 12-month price target to $58 from $54 and confirmed the stock's Overweight rating. According to him, MGM is "the best option to obtain exposure to the Las Vegas Strip, which is still in the middle innings of its recovery and should profit even more in 2023 when group/convention business returns in full force."

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Wynn also reported earnings Wednesday night after the market closed. The casino company reported an adjusted loss of $1.23 per share in the fourth quarter, and it made $1 billion in sales. Analysts polled by Trade Algo thought that the company would lose $1.17 per share and bring in $954.5 million. Wynn Macau 1128 +7.21%'s revenue for the quarter was $77 million, which was less than the $131.7 million it made at the same time last year. However, the company said that this year's Lunar New Year celebrations were strong, which gave them hope that things would get better. 

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“Recent actions by both Macau and Mainland authorities to reopen the market give us great confidence that the difficulties are behind us and the near-term future there much brighter,” Wynn Chief Executive Craig Billings said on the earnings call.

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Joseph Greff, a stock analyst at JPMorgan, raised his price target for Wynn from $103 to $131 and kept the stock's Overweight rating. In a research note, he said, "WYNN (still) remains an attractive mid-cap way to play the China re-opening/Macau recovery, and while the shares have had a good run, we would point out that the Macau recovery is in its early innings."