Morgan Stanley: Pass on Macau Casino Stocks as GGR Growth Stalls
Posted on: June 22, 2026, 02:10h.
Last updated on: June 22, 2026, 02:13h.
- Bank says Macau casino stocks are inexpensive, but it’s too early to jump in
- It lowered 2026 gross gaming revenue (GGR) forecasts
- Morgan Stanley is constructive on MGM China
Macau casino stocks are sporting enticing valuations, but Morgan Stanley believes investors don’t need to rush into the group, particularly as gross gaming revenue (GGR) growth in the Chinese gaming enclave is slack.
In a new report, analysts Praveen Choudhary and Stephen Grambling said they’re now forecasting Macau 2026 GGR growth of 5.3%, well below the consensus estimate of 6%. Part of the problem is expected lethargy in the second and third quarters due to the World Cup.
Our forecasts imply quarterly GGR growth of only 2 percent to 3 percent year-on-year through fourth-quarter 2026,” wrote the analysts. “That said, June and July could see slowdowns related to the [FIFA] World Cup and might even post a negative year-on-year growth number.”
Citing higher costs for operators, the bank expects the six Macau concessionaires will post 2026 earnings before interest, taxes, depreciation and amortization (EBITDA) growth of just 1%, forecasting an aggregate total of $7.93 billion. The analysts note investors should brace for downward EBITDA revisions across the landscape of Macau casino stocks.
Melco, Sands Out of Favor
Among the Macau casino stocks that Morgan Stanley is cautious are on Las Vegas Sands’ (NYSE: LVS) Sands China unit, Melco Resorts & Entertainment (NASDAQ: MLCO) and SJM Holdings.
Citing expectations for weaker-than-expected second-quarter showings, Choudhary and Grambling highlighted Sands China and SJM as candidates for “biggest changes” in terms of downward EBITDA revisions.
Regarding Lawrence Ho’s Melco, the analysts said they “see no near-term triggers and prefer to revisit amid a more constructive Macau outlook.” They note Melco doesn’t pay a dividend and even if the City of Dreams initiates a payout, the yield would likely be well behind Macau peers that are dividend payers.
The analysts also said Melco’s high leverage and elevated capital expenditure plans strain the balance sheet while keeping lids on the operator’s earnings per share and free cash flow.
MGM China a Bright Spot
In the eyes of the Morgan Stanley analysts, the bright spot among Macau casino stocks is MGM China, which is 56% controlled by MGM Resorts International (NYSE: MGM).
“We downgraded the stock to ‘Equal Weight’ in December 2025 after a sharp royalty payment jump, driving negative corporate EBITDA revisions, which we think are complete,” note Choudhary and Grambling. “Since then, MGM China has surprised the market by holding share despite strong competition. It has one of the lowest capex levels, a better balance sheet and less risk of negative estimate revisions.”
At least one sell-side analyst believes MGM China could be divested if Barry Diller’s People Inc. (NASDAQ: PPLI) is successful in its quest to acquire MGM.
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