Published on: June 22, 2026, 02:10h.
Updated on: June 22, 2026, 02:13h.
- Investment bank suggests Macau casino stocks are undervalued but warns against immediate investments
- Revised gross gaming revenue (GGR) projections for 2026 have been decreased
- Morgan Stanley maintains a positive outlook for MGM China
Macau’s casino equities are showing appealing prices, however, Morgan Stanley advises caution for investors, especially with the current sluggish growth in gross gaming revenue (GGR) in this Chinese gaming hub.
In a recent analysis, experts Praveen Choudhary and Stephen Grambling have adjusted their GGR growth forecast for Macau in 2026 to 5.3%, notably below the consensus estimate of 6%. A contributing factor to this decline is anticipated sluggishness during the second and third quarters, coinciding with the World Cup.
“Our estimations suggest quarterly GGR growth will only reach 2 to 3 percent year-on-year until the fourth quarter of 2026,” the analysts noted. “It’s possible that June and July may experience downturns tied to the FIFA World Cup and might even record negative year-on-year growth.”
Highlighting increased operational costs, the financial institution forecasts a mere 1% growth in EBITDA for the six Macau concessionaires for 2026, estimating a combined total of $7.93 billion. Analysts indicate that investors should prepare for potential downward revisions in EBITDA across Macau’s gaming sector.
Melco and Sands Facing Challenges
Among the stocks in Macau that Morgan Stanley is wary of include Las Vegas Sands’ (NYSE: LVS) Sands China, Melco Resorts & Entertainment (NASDAQ: MLCO), and SJM Holdings.
Anticipating weaker-than-expected results in the second quarter, Choudhary and Grambling pointed out Sands China and SJM as potential candidates for significant downward EBITDA adjustments.
Regarding Melco, led by Lawrence Ho, the analysts mentioned a lack of immediate catalysts for improvement, suggesting they will revisit the stock when the outlook for Macau becomes more favorable. They highlighted that Melco pays no dividends and, should City of Dreams decide to initiate payouts, the yields likely wouldn’t measure up to other dividend-paying peers in Macau.
Furthermore, the analysts pointed out that Melco’s high debt levels and substantial capital expenditure commitments are pressuring its balance sheet, which in turn hampers per-share earnings and free cash flow.
MGM China: A Positive Outlook
In contrast, Morgan Stanley views MGM China as a standout among Macau’s casino stocks, with MGM Resorts International (NYSE: MGM) holding a 56% ownership stake in the company.
“After downgrading the stock to ‘Equal Weight’ in December 2025 due to a spike in royalty payments resulting in negative EBITDA revisions, we believe those adjustments are now complete,” noted Choudhary and Grambling. “Since then, MGM China has defied market expectations by maintaining its market share despite intense competition. It benefits from one of the lowest capital expenditures, along with a robust balance sheet and minimized risk of negative estimate revisions.”
At least one analyst postulates that MGM China could be sold if Barry Diller’s People Inc. (NASDAQ: PPLI) successfully pursues its acquisition of MGM.