Gaming analyst favors Sands, DraftKings in comfortable fourth quarter — CDC Gaming

“Gaming stocks are carrying a lot of baggage and negativity right now,” wrote J.P. Morgan analyst Daniel Politzer in a January 23 investor word. Ergo, he favored solely two, going into fourth-quarter earnings calls: Las Vegas Sands and DraftKings.

Digital playing was the world during which Politzer thought firms have been likeliest to beat their earnings projections. However, those self same “stocks are dogged by investor concerns on handle growth, prediction markets, and regulatory/tax risk (legislatures are in session).”

Even Macau-facing shares have been seen to be subdued. Concerns highlighted by Politzer included operator expenditures, because the Chinese gaming business diversifies, and playing revenues within the second half of 2025.

On the Las Vegas Strip, Politzer perceived muted expectations. Worries included how a lot decrease estimates would fall and when money flows would enhance.

“To us, regionals have the cleanest setup from here (and could be a stimulus beneficiary),” the analyst wrote. But even right here, he felt that resulting from headwinds within the type of poor January climate and earnings, they wouldn’t beat forecasts.

Returning to Sands, Politzer predicted Macanese money circulate of $626 million in fourth quarter 2025, as predicted, and a six p.c beat in Singapore, totaling $723 million. Improvements in Macau, Politzer thought, have been a matter of willpower, whereas Singapore would “raise the roof” of upcoming cash-flow expectations.

In Macau, the analyst famous, playing income progress was 15 p.c within the final quarter, reaching 92 p.c of 2019 quantity. However, VIP and different high-end play was accelerating a lot sooner than that of mass-market prospects at 45 p.c, whereas mass-market play was caught within the mid-single digits.

Given these elements, comparisons within the latter half of 2026 could be troublesome, Politzer warned. “January is off to a good start, but we likely won’t learn much,” he continued, since Chinese New Year falls in mid-February. He predicted Macanese money flows of $292 million for MGM China and $281 million for Wynn Resorts, lower than half of Sands’.

DraftKings loved Politzer’s favor as nicely, on account of his perception that it will ship money circulate of $300 million, 20 p.c greater than foreseen by Wall Street. By distinction, he thought Wynn (which was beset by “choppy hold” in Macau) and Penn Entertainment would undershoot their earnings forecasts.

As far because the Las Vegas Strip was involved, Politzer felt Wall Street was confronted with the query, “Is the stepdown in leisure demand structural or cyclical?” Even if it have been cyclical, he added, that creates uncertainty about when the subsequent “up” cycle will start.

He didn’t see aid arriving till the straightforward comparisons of 2026’s third quarter. The first quarter was more likely to be down six p.c for MGM Resorts International and one p.c off for Caesars Entertainment (and flat for Wynn). The second quarter would see a leveling off, he predicted. Growth, Politzer penned, would arrive within the fourth quarter of 2026 and be on the order of two or three p.c.

Regionally, Politzer noticed a slight slowdown in progress, averaging three p.c in 2025’s fourth quarter. He attributed this to diminished promotional exercise and probably to antagonistic climate. He mentioned Boyd Gaming and Caesars would expertise a “slight regional upside,” however that Penn would miss its targets barely.

The market’s temper was mentioned to be mercurial about digital playing, “reflecting concerns re: slowing/declining handle growth, prediction markets, and tax/regulatory newsflow.” The introduction of sports activities betting in Missouri would, Politzer mentioned, contribute to 9 p.c deal with progress over the quarter. That was, nevertheless, a slowdown as deal with had grown 15 p.c in October and 10 p.c in November, contracting three p.c in December.

DraftKings was, Politzer forecast, on tempo for 11 p.c deal with progress, whereas FanDuel was more likely to do lower than half that, partly resulting from heavy promotions. “On a more positive note, hold was mostly normal,” he added, rebounding from a really unlucky fourth quarter of 2024 for sportsbooks.

In conclusion, Politzer tweaked a few of his value targets. He subtracted a greenback every from Caesars (to $37 per share) and DraftKings (to $41 apiece) and two {dollars} from Wynn ($143 every). He added $1 per share to Churchill Downs (to $131), Sands ($71), and Station Casinos (now $20). Sportradar sustained a heavy minimize, down $5 to $30.