LVS and WYNN are fairly valued at current price: Jefferies

Equity analysts at research firm Jefferies downgraded last Thursday two notable names in the online casino space. Las Vegas Sands Corp (NYSE: LVS) and Wynn Resorts Limited (NASDAQ: WYNN) were each taken lower to a “hold” rating. 

In his research note, David Katz agreed that continued recovery in Macau could remain a benefit for both casino stocks, but said:

The timing of the downgrade also coincides with growing popularity of crypto casinos that represents a longer-term threat to traditional casinos.

Although the analyst did not mention the rising competition in his note, Katz trimmed his price target on LVS from $69 to $65. In WYNN, Katz now sees upside to $114, representing a notable trim from a prior target of $135.

Katz recommends against adding to LVS or WYNN

Through May 2023, David Katz noted, gross gaming revenue stands at about 60% of pre-pandemic levels. 

The Jefferies analyst expects Las Vegas Sands to grow its EBITDA margin by 29% in 2024 and Wynn by a whopping 52%. Still, his research note reads:

According to Katz, it’s reasonable for investors who already own these two casino stocks to keep their position. He did, however, caution against adding.