Gaming America Jul/Aug 2020

MARKET ANALYSIS

INVESTORS CORNER: BUY OR SELL?  Tim Poole speaks to Adam McLaren, VP and senior analyst at Moody’s Investor Service, about how investors should react to the US casino industry’s reopening. At the height of the coronavirus pandemic in March, share prices in US gaming hit a low that would have been unthinkable in 2019. MGM Resorts International sat at $7.14 per share; Caesars Entertainment tanked at $3.52; Boyd Gaming also  fell to below $8 and stocks across US gaming were at an equally depressed level. An unprecedented global situation had made an unprecedented impact in the stock market.  But with the US casino industry now reopening, and stocks slowly recovering, how exactly should investors react to the current situation? MGM is back at $18.21, though this is still almost half its January value. Eldorado Resorts, meanwhile,  is at $42.01, up from $8.82 in March but down from $68.93 in February. Penn National has recovered well, currently at $32.14 at press time, with its five-year high in February only a few dollars above this figure at $37.81.  Clearly, there are mixed results so far, with some recoveries an instant success story and other stocks taking longer to 32 GAMINGAMERICA

adapt to the ‘new normal.’ So is it a good time to reinvest in the gaming sector or should traders stay away? To gauge how gaming firms will fare in the short to medium term,  Gaming America spoke with Adam McLaren, VP and senior analyst at Moody’s Investor Service. Over the next 18 months or so, bond credit agency Moody’s is projecting a tough recovery for the gaming sector. And, initially, McLaren expects Las Vegas operators to see a “pretty significant” decline in the next couple of quarters.  “What we’ve tried to lay out is, clearly in the next 12 months, we think it’s still going to have results significantly below 2019, which is the baseline of a normalized year,” explains McLaren. “There will be a pretty significant decline in the next couple of quarters but the recovery is taking effect: half of US casinos are reopened but our view is at least, right now, there’s a lot of uncertainty over the health of a consumer, consideration to social distancing and unemployment.”