Las Vegas is slowly but surely returning to returning back to normal-ish as the city begins to see a steadily climbing number of visitors – but now with masks and social distancing.
As vaccine distribution ramps up across the nation, Morgan Stanley upgraded Caesars Entertainment (NASDAQ: CZR) and MGM Resorts (NYSE: MGM) this week citing Vegas’ strength as the largest domestic gaming hub.
Analyst Thomas Allen boosted both stocks from Neutral to Overweight, issuing a $113 price target for Caesars and a $45 target for MGM – indicating upside of 22% and nearly 10%, respectively.
“We visited Vegas last week and found the market is in the midst of a fast, strong recovery, with especially positive booking trends,” Allen wrote in a note to clients. “We believe consensus is grossly underestimating the earnings power of companies exposed, and hence upgrade CZR and MGM to ‘overweight.’”
But of the two, Strategic Wealth Partners CEO Mark Tepper says MGM might be the better bet on a Vegas recovery.
“You’ve got a great sports club exposure, you’ve got fantastic properties that focus on the non-high roller gambler,” Tepper said. “You’ve got pricing power coming back, and you’ve got an absolute ton of pent-up demand for people to vacation, socialize and just have fun.”
Even still, Tepper says the picture looks bright for Vegas.
“Airline tickets from Cleveland to Vegas have quadrupled over the last few months,” Tepper added. “My boots-on-the-ground research informs me that the pool party staff at the hotels have been rehired. They’re getting ready for an influx of people right now.”
Vios Advisors at Rockefeller Capital Management managing director Michael Bapis is also bullish on Vegas, citing one particular plus the city has to offer.
“Vegas is going to be one of the first places that conferences come back to when people need to meet and where people need to get together, probably in the third and fourth quarter,” Bapis said. “As this rollout continues, and the demand just keeps going higher, you’re going to see [both] stocks go higher.”