As we brace for a boom in travel and leisure over the coming months, Las Vegas gaming stocks definitely seem worth a second look. Undoubtedly, the Vegas stripe has changed a great deal in recent years, with new fancy hotels (Fontainebleau), entertainment venues, and attractions to keep travelers coming back, even amid the rise of online gambling.
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Indeed, you don’t need to leave home to bet on a slew of various games, with a ton of apps that have hit the market in recent years. Still, the Vegas magic just keeps us coming back for an experience that spans well beyond hitting the slot machines.
As Vegas hotels double down on luxury experiences, perhaps the top Vegas stocks may be able to hit the “high roller” average price targets (of more than 40%) currently in place. Therefore, let’s use TipRanks’ Comparison Tool to determine which Vegas stock—WYNN, MGM, CZR—holds the most upside for the year ahead.
Wynn Resorts (NASDAQ:WYNN)
Speaking of luxury stays, it’s tough to top the type of experiences offered by Wynn Resorts. The firm arguably has the most robust hold on the very highest end of the gaming market, with best-in-class luxury dining experiences and fabulous décor that’s more a work of art than anything. With shares currently trading at below industry multiples, I’m inclined to stay bullish on the stock.
Though the Las Vegas business has been firing on all cylinders, helping the firm clock in an impressive 31% sales increase in its latest quarter, Wynn is really more of an international gaming story. Specifically, it’s a way to bet on a comeback in the Chinese economy through Wynn’s Macau resorts.
Early signs are overwhelmingly positive, with Macau casino revenue reportedly surging almost 30% to highs not seen since before the COVID-19 pandemic began. If such strength extends into the second half of this year, Wynn’s Macau business may evolve from a laggard to a primary driver.
However, recent signs are encouraging, and the full impact of a recovery in China may not yet be fully baked into WYNN stock. At writing, shares go for 12 times trailing price-to-earnings (P/E), far less than the resorts & casinos industry average of 16.9 times.
What Is the Price Target for WYNN Stock?
WYNN stock is a Strong Buy, according to analysts, with nine Buys and three Holds assigned in the past three months. The average WYNN stock price target of $124.90 implies 40.0% upside potential.
MGM Resorts (NYSE:MGM)
MGM Resorts is more of a play for investors looking for a better balance between Las Vegas and Macau. Indeed, the U.S. market seems to be in a steadier spot than China in recent quarters, more so when you consider the rate cuts to come and fading inflationary headwinds that will help consumers feel better about the future. Still, don’t discount the explosive potential as China’s economy gets off the canvas.
Like Wynn, MGM seems to be more than willing to spruce up its existing resorts to offer a more “lux” feeling. The Bellagio and ARIA are two impressive properties that are as classy as they are “growthy.” As things start looking up in the U.S. and China, I’m staying bullish on MGM stock.
The latest quarter saw MGM get a nice lift from Vegas’ high-end properties and the ongoing recovery in MGM China. Undoubtedly, Macau looks like it could become more of a tailwind after many years of being viewed as a drag. According to JPMorgan’s (NYSE:JPM) Joseph Greff, MGM’s Macau business could post $1.17 billion in earnings before interest taxes and depreciation (EBITDA), just above the Wall Street estimate of $1 billion, thanks to “momentum in Macau.” Greff could prove spot-on to be more optimistic about Macau, especially if the recent recovery in the region has legs.
At 15.6 times trailing P/E, MGM currently has a nearly 10% discount to the resorts & casinos industry average. Given the solid mix of Vegas and Macau exposure, such a multiple seems worth paying.
What Is the Price Target of MGM Stock?
MGM stock is a Strong Buy, according to analysts, with 13 Buys and two Holds assigned in the past three months. The average MGM stock price target of $57.54 implies 42% upside potential.
Caesars Entertainment (NASDAQ:CZR)
Caesars Entertainment is the ultimate value play for investors looking for the absolute cheapest way to bet on a Vegas comeback. Unlike Wynn and MGM, you won’t benefit from the big recovery over in Macau. That said, improving industry dynamics can act as the tide that lifts all boats. And if that’s the case, there’s probably no better way to play the trend than with the lowest-cost name in the scene, even if it lacks in terms of luxury. Given the depressed multiple and a new stake from a big-name billionaire investor, I just have to stay bullish on the stock.
Perhaps the biggest reason for preferring CZR stock over peers is the recent Bloomberg report that shed light on billionaire activist Carl Icahn’s stake in the firm. Undoubtedly, Icahn is a man who knows value and the gaming industry at large. With a stake in the new Vegas hotel Fontainebleau, this isn’t Icahn’s first rodeo, so to speak. Though specifics regarding Icahn’s Caesar stake aren’t certain at this juncture, one thing is: he “likes the stock.”
With its ownership of a huge chunk of the Vegas Strip, an expanding digital business, and a dirt-cheap multiple, it’s not a mystery why Icahn likes the name. Perhaps the biggest draw is the valuation, with shares going for 10.5 times trailing P/E at writing, 38% below the resorts & casinos industry average.
What Is the Price Target of CZR Stock?
CZR stock is a Strong Buy, according to analysts, with 10 Buys and three Holds assigned in the past three months. The average CZR stock price target of $53.73 implies 43.6% upside potential.
The Takeaway
Vegas gaming plays look incredibly compelling, with the average analyst price target for each stock pointing to more than 40% upside for the year ahead. And as Macau continues its recovery, perhaps the China-exposed Vegas gaming plays sport the best odds right here.
Nonetheless, of the three names, analysts see the most upside potential (almost 44%) from CZR stock. Though it lacks Macau exposure, it is the cheapest of the trio based on P/E alone. Additionally, Carl Icahn’s stake is a huge vote of confidence in the stock’s value.
