Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
J. P. Morgan analyst Joseph Greff Dec. 15 wrote about a recent meeting with Melco Resorts and Entertainment CEO Lawrence Ho and CFO Geoff Davis in New York. Noting that it was the first time in a while that the Hong Kong/Macau-based CEO has met with investors in the U.S., Greff wrote that J.P. Morgan came away “incrementally positive on Melco’s position within Macau and see it as having ammunition to grow faster than its Macau peers in 2024 (and executive management compensation is linked to Melco’s performance relative to the market so there is incentive) as it has (1) easier year-over-year comparisons than peers (1Q and 2Q23 performance lagged the market a bit); (2) the ability to generate incremental growth from Phase 2 expansion at Studio City (official grand opening launch on February/March 2024); and (3) incremental marketing /events to drive better premium/base mass performance at both City of Dreams and Studio City in Macau. We continue to anticipate debt pay down (both through use of its excess cash balance and cash flow from operations) and see its non-Macau operations as steady.”
David Katz of Jefferies Dec. 17 commented on the recent resignation of Entain CEO Jette Nygaard-Andersen after pressure from activist investors. “Under her leadership, Entain experienced slowing revenue growth despite spending £2 billion on acquisitions, coupled with regulatory issues and increasing costs,” Katz wrote. “Following the resignation, Entain’s board of directors chose Stella David to act as interim CEO until Nygaard-Andersen’s successor is named. The changes occurring at the management level have prompted discussion on whether MGM will once again pursue the acquisition of a struggling BetMGM business or all of Entain. We continue to believe that MGM owning the entirety of the platform is the most likely ultimate outcome.”
