The initial reopening of the Las Vegas Strip went relatively well for casino operators in early June, but abysmal room rates and a second wave of the COVID-19 outbreak seems to have eliminated hope that the Vegas recovery will continue any time soon.Las Vegas Sands Corp.(NYSE: LVS) management told investors this week that Vegas is suffering "a world of hurt," and the U.S. gaming hub has a long way to go in recovering from its shutdown, according to BofA Securities.The Numbers: Pricing of Las Vegas Strip hotel room rates for the month of August is now down 40% from a year ago. Pricing conditions on the Strip have worsened since June 12 when August rates were down just 31%. September prices are also down 37% year-over-year, suggesting little improvement heading into the fall.Vegas strip operators Las Vegas Sands, MGM Resorts International (NYSE: MGM), Wynn Resorts, Limited (NASDAQ: WYNN) and Caesars Entertainment Corporation (NYSE: CZR) are taking a hit from the plummeting room rates, BofA analyst Shaun Kelley said in a note.Las Vegas Sands recently closed the Palazzo back up for weekday reservations after midweek occupancy levels dropped to 25% or lower."We see little reason to think these operating challenges are exclusive to LVS and we have seen recent furloughs from WYNN in addition to layoffs at the Tropicana and Circus Circus," Kelley said Friday.Bleak Outlook: BofA estimates Las Vegas Sands will take the smallest hit on room rates in August, down 13% compared to a year ago. Kelley said Wynn will take the largest hit, with room rates down 52%.Las Vegas Sands management said this week there is no evidence investors should expect the city's group and convention business to return anytime soon.KAYAK flight search data for Las Vegas is reportedly down 68% from a year ago. Clark County, Nevada reported more than 1,000 new COVID-19 cases on Thursday for the fifth day in the past week.Benzinga's Take: The two biggest questions for Vegas casino stock operators at this point is will reopened casinos stay open and how long will it take for travelers to return?For long-term investors looking to play the recovery, Bank of America has the following ratings and price targets for major Las Vegas casino operators: * Las Vegas Sands, Buy rating and $61 target. * Wynn, Buy rating and $95 target. * MGM Resorts, Underperform rating and $15 target.Related Links:Analyst: End Of Quarantine Restrictions 'Very Positive For Our Macau Stocks'Analyst: 'Trends Are Encouraging' For US Regional CasinosSee more from Benzinga * What Are EV Regulatory Credits And Why Is Tesla Selling So Many Of Them? * This Day In Market History: The Liquidation Of Corporate Fraud ZZZZ Best * Tesla's Valuation Still 'Appears Overcharged' Following Q2 Earnings(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
from Yahoo Finance https://ift.tt/2BqSCdI
Leave a Reply