UBS Securities has revised down its 12-month price target for Crown Resorts by more than 10 percent to $16.60 a share from $18.45 previously, reflecting lower earnings from its Macau joint venture, Melco Crown.
The revision follows a note last month by UBS analysts who said weak first quarter revenue in 2015 and slower sequential recovery in high-end demand had led them to lower Crown’s Macau revenue forecasts for full-year 2015 and full-year 2016.
Rising labor costs and increasing mass promotions are expected to negatively affect margins, the analysts said.
UBS cut the forecast for the company’s full-year 2015 net profit by 10 percent; full-year 2016 net profit by 14 percent and full-year 2017 net profit by 13.3 percent. The bank, however, retained a “buy” rating on the stock.
Crown reported its half-year net profit fell 47 percent to $201.8 million.
Deutsche Bank has been similarly conservative about Crown’s shares, downgrading its rating to “hold” and cutting its price target by 11 percent to $15.50.