The Zacks Analyst Blog Highlights:MGM Resorts International, JPMorgan Chase, Las Vegas Sands, Melco Crown Entertainment and Phillips 66
CHICAGO, Jan. 27, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the MGM Resorts International (NYSE:MGM-Free Report), JPMorgan Chase & Co. (NYSE:JPM-Free Report), Las Vegas Sands Corp. (NYSE:LVS-Free Report), Melco Crown Entertainment Limited (Nasdaq:MPEL-Free Report) and Phillips 66 (NYSE:PSX-Free Report).
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Here are highlights from Friday's Analyst Blog:
Casino Stocks Down on Macau Growth Worries
Share price of one of the leading gaming companies, MGM Resorts International (NYSE:MGM-Free Report) fell 2.4% on Jan 22, 2014 after JPMorgan Chase & Co. (NYSE:JPM-Free Report), a financial holding company, downgraded it to Neutral from Buy as per investors.com. According to JPMorgan, excessive aggressive growth is expected from the Macau market – one of the top gaming destinations in the world and a region from which MGM earns the majority of its revenues.
MGM Resorts' stock hit a 52 week high on Jan 10, 2014 after the Chinese government announced solid gaming revenues for Macau in 2013. According to China's Gaming Inspection and Coordination Bureau, Macau recorded casino revenues of $45 billion in 2013, up 18.6% year over year. This led investors to be overenthusiastic and the stock was heavily traded. This created a bubble leading JP Morgan to downgrade the stock anticipating market saturation.
Share price of another gaming company Las Vegas Sands Corp. (NYSE:LVS-Free Report) also declined 1.9% on Jan 22, 2014. Like MGM Resorts, Las Vegas Sands also earns majority of its revenues from Macau, the only city in China where gambling is legal. Las Vegas Sands also hit a 52 week high on Jan 2, 2014 due to similar reasons and its shares were heavily traded.
Other casino operators like Melco Crown Entertainment Limited (Nasdaq:MPEL-Free Report) and Wynn Resorts Ltd. which also earn majority of their revenues from Macau experienced a share price decline on Jan 22 owing to these issues.
JPMorgan's downgrade could also be attributed to a decline in credit growth rate. Credit growth is one of the driving factors in the Macau casino gaming industry and a decline in credit growth rate limits prospects for economic expansion. It fell 25% year over year in Dec 2013 as per Wells Fargo & Company. The decline in credit growth is expected to dampen results for mid-2014. Also, a few analysts expect high-end VIP gamblers to avoid the Macau crowd during the week-long Chinese New Year celebrations from Jan 31 to Feb 10.
Given these factors, JP Morgan indicates that these Macau casino stocks are fairly valued and advises investors to cut down on their positions instead of being too bullish.
While Melco Crown Entertainment and Wynn Resorts carry a Zacks Rank #1 (Strong Buy), MGM Resorts International and Las Vegas Sands carry a Zacks Rank #2 (Buy).
Phillips 66 Expanding Connector Project
Phillips 66 Pipeline LLC, a wholly owned subsidiary of Phillips 66 (NYSE:PSX-Free Report) announced that it will expand the capacity to transport refined petroleum products across the Houston Ship Channel via pipeline. Earlier the company completed a successful open season for the Cross-Channel Connector after receiving shipper commitments to utilize the additional capacity. In addition, Phillips 66 Pipeline LLC received positive response to a potential Phase 2 of the project and is proceeding with an evaluation of this expansion.
The company anticipates that the expansion project will be complete by the fourth quarter of 2014. The Cross-Channel Connector is expected to have a capacity of up to 180,000 barrels per day. The Phase 2 expansion could add an additional 50,000 barrels per day of capacity.
The Cross-Channel Connector project leverages existing assets and will combine a reactivated pipeline under the Houston Ship Channel along with the expansion of an active line in Pasadena. The company plans to connect to Magellan's refined product pipeline which will allow the Cross-Channel Connector to transport refined petroleum products from the south of the Houston Ship Channel
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