Casino Stocks Winners: MGM , Melco
By Jeanine Poggi
NEW YORK (TheStreet) -- Casino stocks are making an attractive bet Monday morning, following upbeat news within the sector.
Macau reported a 40% jump in gaming revenue in September to $1.91 billion. These results fall about in-line to slightly above analysts' expectations, but were down 3% month-over-month.
Historically, September gaming revenue has lagged August by about 10%. Since it is only off 3% this year, it should be viewed as a positive, Sterne Agee analyst David Bain wrote in a note.
Wynn Resorts(WYNN _) benefited from a stronger hold percentage in late September, boosting its market share to 12% for the month from 10%, according to a Wells Fargo note. Wynn has gotten off to a strong start in October, holding well through the first week of Golden Week, analyst Carlos Santarelli wrote in a note.
Las Vegas Sands reported a 19% market share for the month, Melco Crown Entertainment(MPEL_) a 16%, Galaxy 12% and MGM Resorts(MGM _) 10%.
Bain says Melco was the biggest beneficiary of the month, as the company is averaging a 16.5% market share for the quarter, compared with a 13.5% market share in the second quarter.
As a result, Melco is among the biggest gainers, rising 5.3% to $5.35 in morning trading.
Santarelli forecasts October gaming revenue will surge 38.4% year-over-year in October. Bain is thinking even bigger, expecting October results will hit an all-time monthly high of $2.15 billion, receiving a boost from Golden Week, which is a seven-day holiday that started on Oct. 1. Casinos with a bigger mass-market gaming base, like Las Vegas Sands, should benefit from the holiday, Bain wrote.
According to Bain's checks, Wynn Macau was sold out through Oct. 9.
Shares of Las Vegas Sands are increasing 1.5% to $35.72, while Wynn is up 3.2% to $89.88
Elsewhere in the casino sector, MGM announced Monday morning that it obtained an amendment to its $1.8 billion senior secured credit facility for mechanics' liens on its CityCenter development. Under the agreement, these liens can exist through Dec. 31, 2010, prior to reduction in the allowable limit.
The total amount of mechanics liens as of Sept. 30 was $424 million, down from $494 million on June 30.
"While we sense this amendment was anticipated by investors, we do believe it will remove an overhand on shares in the near term, and as such, we would expect shares to respond favorably to this morning's announcement," Santarelli wrote in a note.
--Written by Jeanine Poggi in New York.
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