U.S.-listed shares of casino operators in Macau tumbled after analysts began cutting their forecasts for gross gambling revenue growth in the territory this year after August figures failed to show a pick up in VIP traffic.
Wynn Resorts fell more than 5 percent, Las Vegas Sands dropped 6 percent, MGM Resorts International was down 4.5 percent and ADRs in Melco Crown International gave up 6.5 percent.
Sterne Agee on Tuesday cut its forecast for 2014 GGR to 3 percent from 5 percent after revenue declined for a third straight month in August, falling by 6.1 percent and missing most analysts’ forecasts.
For September, Sterne Agee said it expects GGR to be off by between 5 and 9 percent, while for the third quarter as a whole it expects a decline of 5 percent, driven by a 17 percent year-on-year forecast decline in VIP. That will be offset by mass table growth of 18 percent.
However, the firm reiterates its comments that the mass market in Macau remains strong and new supply coming on stream from next year will provide a further boost to a higher margin segment of the market.
UBS in a note said it was cutting its VIP volume estimates for the full year to down 7 percent from its earlier forecast for a gain of 2 percent. Forecasts for the mass market are unchanged at a gain of 17 to 18 percent.
The bank said the VIP market will face ongoing issues from the political climate in China, where authorities are clamping down on corruption, as well as greater regional competition.
It says the added competition from new resorts opening around Asia, including in the Philippines, may take 3-4 percent of junket volume in 2015.
UBS cut its price target on Wynn to $199 from $205, on MGM to $25 from $26 and LVS to $71 from $78. It has a neutral rating on all three.
Sterne Agee also cut its earnings estimates for Melco, Crown, LVS and MGM in the 2014, 2015 and 2016 calendar years on the lower expectations for VIP revenue.