Morgan Stanley: Avoid Macau Casino Stocks as Gaming Revenue Growth Grinds to a Halt

• Macau casino stocks look cheap, but Morgan Stanley warns investors against rushing in while regional growth stalls
• The firm trimmed its 2026 Macau gaming revenue growth expectations to 5.3%, flagging expected lethargy in the second and third quarters
• MGM China remains the firm’s preferred pick in the region due to superior cost controls and its ability to hold market share despite fierce competition

Macau casino stocks are sporting enticing valuations, but Morgan Stanley has warned investors not to rush into the sector as gross gaming revenue (GGR) growth in the enclave continues to decelerate.

In a new report, Morgan Stanley 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 FIFA World Cup.

Our forecasts imply quarterly GGR growth of only 2% to 3% 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 drawing caution from Morgan Stanley are 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.

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.