With 2Q26 earnings season just around the corner, investment bank Morgan Stanley says it is still too early to dip into Macau gaming stocks – even if valuation looks cheap.
In a weekend note, analysts Praveen Choudhary and Stephen Grambling warned that the recent slowdown in GGR growth and negative operating leverage means that estimate revisions remain negative, with industry observers continuing to cut forecasts.
This, they added, is likely to continue, driven by lower GGR growth expectations and a structurally higher cost base.
“With our 2026 quarterly GGR growth forecasts for 2Q to 4Q at around 2% to 3% yar-on-year, we expect a continued decline in GGR growth expectations,” Choudary and Grambling wrote, observing that high free cash flow and dividend yield among Macau’s concessionaires aren’t yet appreciated by investors.
However, the investment bank has singled out MGM China as its top pick, stating, “We downgraded the stock to “Equal Weight” in December 2025 after a sharp royalty payment jump, driving negative corporate EBITDA revisions, which we think are complete. Since then, MGM China has surprised the market by holding share despite strong competition. It has one of the lowest capex levels, a better balance sheet and less risk of negative estimate revisions.”
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