"Too early to call a bottom" on Macau: Barclays

Barclays analyst Felicia Hendrix said in a report that it is "too early to call a bottom" on the Macau gaming industry due to the ongoing and persistent headwinds facing the market.

Hendrix noted that new property openings in the region "provide hope for the optimists" but that the negative trend will continue and weigh on stocks.

Hendrix said in the longer term, particularly by year end, the declines should start to be "less steep," which is "compelling" for many investors. 

The analyst cited McKinsey data that suggested the total addressable market is roughly 200 million people and could grow to nearly 300 million by 2020.

"Given China's rapidly growing middle class, we view the opportunity for robust growth in Mass GGR in Macau over the long term as promising," Hendrix wrote.

 "In the short term, we acknowledge that the current adjustment phase the market is going through will need to stabilize before consistent growth can be expected.

Hendrix downgraded Wynn Resorts from Overweight to Equal-weight, lowering the company’s price target from $160.00 to $105.00, following the company’s shares dropping 46.08 percent over the past 52 weeks. She also maintained an Overweight rating on shares of Las Vegas Sands Corp. with a price target reduced to $55 from a previous $59 due to the company's "leading" exposure to the high-margin mass market. 

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