Investment bank Morgan Stanley has downgraded its industry view on Macau gaming including revenue and EBITDA forecasts that are now lower than consensus, citing increased margin pressure to due higher costs – particularly in regard to player reinvestment.
In a note, Morgan Stanley’s Praveen Choudhary, Stephen Grambling, Anson Lee and Nicholas DeValeria said they expect Macau’s GGR and EBITDA growth to soften versus 2025 to 6% and 2% respectively, with margin pressure potentially driving underperformance.
“We believe cost pressure (especially reinvestment) is structural due to [the industry’s] premium mass focus,” they wrote, reflecting recent commentary from concessionaires around a promotional environment that doesn’t look like easing anytime soon.
On the low 2% EBITDA growth forecast for 2026, they pointed to three core reasons: 2H26 GGR growth slowing due to base effect and base mass continuing to be slow, elevated levels of promotion allowances and continued non-gaming expenses.
Despite this, the bank still expects Macau GGR to outperform Singapore and Las Vegas this year – both expected to grow by just 1%. As such, its stock picks include Sands China over Las Vegas Sands (LVS) because the former’s market share ramp-up should continue in 2026, while LVS “could face headwinds from hold rate normalization in Singapore, as we think MBS earnings have peaked.”
Morgan Stanley also prefers Melco stocks over MGM China, describing Melco as “the most attractive on valuation across peers. We prefer it over MGM China as our EBITDA estimates are 1% above consensus for Melco versus 4% below for MGM China. We also expect market share gains from the 2H26 launch of Countdown Hotel.”
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