Gaming stocks that could be winners in 2023 include Wynn Resorts and Caesars Entertainment

The outlook for the gaming industry in 2023 is fraught with uncertainty – including a revaluation of iGaming and sports betting as interest rates move higher, widespread concerns about consumer discretionary spending and Some casino operators.

Despite the expected turmoil in the backdrop, investors have plenty of reasons to place fresh bets.

Deutsche Bank Selects Wynn Resorts (Wynn) and Las Vegas Sands (LVS) as the top two picks for gaming earnings growth expectations in 2023. Meanwhile, Caesars Entertainment (Czech Republic) and MGM Resorts International (MGM) is also said to be headed for a strong year.

“While there are certainly reasons to be cautious about the 2023 outlook for the Las Vegas Strip, we believe the growth drivers (group strength/returning international visitors/event calendar) are relatively compelling and we believe CZR and MI GM is all set to outperform its peers in the domestic regional market given the company’s specific initiatives and comparisons.”

In regional play, analyst Carlo Santarelli sees relative value as key in 2023. Red Rock Resorts (deposit reserve ratio) topped the list due to its organic growth pipeline and continued expense discipline in the solid Las Vegas local market. Boyd Games (BYD) are also noted as a compelling relative way to play groups.

CB Richard Ellis equity analyst John DeCree believes that the real situation in the Gaza Strip is a surge in group and conference business, which was up 32% year-on-year through the end of October and 20% higher than in 2019. Total visits rose 7.3% year-over-year to 3.6 million, within 1% of pre-COVID levels. As part of CBRE’s overall bullish thesis on the Las Vegas Strip, DeCree expects accelerated growth in the group and convention businesses to have a materially positive impact on EBITDA. The casino stock with the highest exposure to Las Vegas is MGM Resorts (MGM), Caesars Entertainment (Czech Republic), Vesey Properties (Vichy), Golden Entertainment (GDEN), and Wynn Resorts (Wynn). Boyd Game (BYD) and Red Rock Resort (deposit reserve ratio) are also indirectly exposed to Strip overflow.

At the same time, Bank of America is gradually optimistic about the Macau sector. Despite the uncertainty surrounding the reopening of the Chinese economy and geopolitical uncertainty, Macau-exposed companies are poised to gain about another 25% if EBITDA and valuations are fully restored to pre-COVID levels. Las Vegas Sands (LVS), MGM Resorts International (MGM), and Wynn Resorts (Wynn) are all set by companies with higher price targets at higher P/E ratios, while recovery potential is offset by geopolitics and low visibility of the COVID recovery. Other companies are also interested in Macau stocks after China’s State Council announced a new 10-point plan to ease COVID restrictions and top officials continued to soften the tone on the virus. The new rules include the removal of mass testing, quarantine requirements and reduced use of the health code system. The Macau industry has also recently received a boost as current license holders were renewed to remove suspense from the industry. Melco Crown Entertainment (MLCO), SJM Holdings (OTCPK: SJMHF) and Galaxy Entertainment (OTCPK:GXYEF) is receiving the most attention from investors heading into 2023.

Casino/iGaming/sports betting stocks top performers in 2022 and head into the new year with some momentum, including Las Vegas Sands (LVS) +25.2%, Melco Crown Entertainment (MLCO) +11.2%, Monarch Casino Resort (MCRI) +9.8%.

On a valuation basis, Century Casinos (RMB) and Boyd Gaming (BYD) trade at the lowest forward price-to-earnings ratio.

in a Seeking Alpha Quant Rating BasisBuy-rated stocks include Light & Wonder (Northwest wind), International Game Technology (gas turbine), Monarch Casino & Resort (MCRI), Caesars Entertainment (Czech Republic), and Genius Sports (genius).