Macau gaming stocks still have room to grow

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It looks like the Chinese middle class is flocking to Macau in a big way, even if speculators are fretting about a slowdown in the gambling haven's ability to entice ultra-rich visitors. Morgan Stanley just downgraded Galaxy Entertainment ( GXYEF , quote ) from outperform because at this point the opening of the Galaxy Macau -- and the accompanying market share gain -- is already priced into the stock. On the other hand, Melco Crown Entertainment ( MPEL , quote ) could run up to $9.50 in the analysts' eyes. Valuations remain compelling, they say. This is a reaction to the fact that Macau stocks have held up much better than many believed they would. The affluent are still spending 5% more in these casinos than they were a quarter ago, but the big story is that the mass market customer is also sticking around -- and spending 10% more on a quarter-to-quarter basis. In the long term, casinos that cater to the middle class may end up dominant. Starting around May, the elite names -- MPEL and Wynn Macau ( WYNMF , quote ) -- may start lagging or even decline.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , International , Stocks

Referenced Stocks: GXYEF , MPEL , WYNMF

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