In this week’s piece we discuss our thoughts on 1) H’s reported interest in Xenia’s Kimpton properties, and how that could tie into a potential Grand Hyatt Seoul sale; 2) MGM’s reported interest in selling MGM Grand packaged with MGP’s Mandalay Bay; and 3) our view on NCLH following its Encore event this week. Lastly, if you missed our webcast this week please check out the replay or the slides. In the webcast we touched on several important factors for our group coming out of earnings season with 35 slides.
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Our coverage wrapped up 3Q earnings season last week, and later this week we plan to host a webcast discussing key themes, top ideas, and catalysts coming out of earnings (more details to come). For now, in this week’s piece we provide a summary of earnings, including consensus estimate changes post reports, stock reactions, and our view on each stock and whether we are more constructive or less constructive coming out of earnings.
About half of our coverage has now reported earnings, and in this week’s piece we discuss some read-throughs for those set to report this week. Specifically, we’ll discuss five points: 1) our group is generally responding well to reports that haven’t been great; 2) read-throughs to NCLH from RCL’s report; 3) read-throughs to VAC from HGV and WYND reports; 4) we back into implied Vegas results for CZR and WYNN now that we have industry data and competitor reports, and it appears CZR had a strong quarter in Vegas; and 5) we back into implied Macau results for WYNN and Galaxy now that we have industry data and competitor reports.
In this week’s piece we highlight work from Wolfe’s Technical Analyst Team. Our technical team provided us their technical outlook for the stocks under our gaming, lodging, and cruise coverage, and we share their results along with how it ties to our fundamental views.
In this 40-page report we preview 2020, as well as upcoming earnings season, and we look at key themes for the stocks in our coverage. We’re also introducing quarterly 2020 estimates and annual estimates through 2023, and our target prices now extend to YE20 (Ex. 3). Valuations for our group remain well below prior peaks (Ex. 1), and the stocks are trading at historic lows versus consumer staples (Ex. 2).
In this week’s piece we discuss five topics, including 1) valuations for our coverage are trading near historic lows relative to consumer staples in this risk-off and defensive-oriented tape; 2) improved advance hotel booking trends for the third straight month; 3) visitation trends to Macau during Golden Week thus far; 4) thoughts on recent NCLH management changes; and 5) thoughts around price dislocation in CCL’s dual listing with the LSE equity trading at a large discount to the NYSE equity.
The cycle has dominated the narrative for cruise, gaming and lodging since 2018 when the macro began to slow, which is understandable for our cyclical coverage. We expect macro developments to dictate near-term stock performance, but over the longer term we believe global travel still has secular drivers, which we’ll examine. We believe those secular drivers include 1) a growing middle class in emerging economies, like China, 2) an aging U.S. population with time and money to travel, 3) consumption behavior which has shifted in favor of travel, 4) a growing importance on multi-generational travel, and 5) still under-penetration of travel.
In this week’s piece we discuss 1) read-throughs to RCL and NCLH from CCL’s F3Q report; 2) expectations for the upcoming VAC analyst day; 3) new resort fee legislation introduced in the House, and what that means for our coverage; and 4) Vegas RevPAR outperformance versus the rest of the country, and why we believe that will continue well into next year.
In this week’s piece we discuss four topics: 1) a rotation from growth to value last week, and what that means for our coverage; 2) healthy U.S. GGR trends in August and thoughts on September; 3) timeshare stocks now seem back in favor, which we’ll discuss, including some LBO math on HGV that we think would seem to support a buyout; and 4) the hurricane forecast and measuring the likelihood of another storm as we’re now over halfway through the Atlantic hurricane season.
Oil prices seem likely to spike on Monday (9/16/19) following news of the strikes at Saudi oil fields over the weekend. Below we review exposure to rising fuel prices for each of our sub-sectors. The biggest impact is a negative impact to cruise lines.
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