Bet on Caesars over Wynn as casino rebound diverges in U.S. and China, Bank of America says
The post-lockdown recovery for Las Vegas casinos should help Caesars Entertainment become a fixture in digital gaming and a winner for investors, according to Bank of America. Analyst Shaun Kelley said in a note to clients on Monday that travel and gaming demand in Las Vegas is bouncing back. Bank of America upgraded Caesars to buy from neutral, saying the recovery at physical casinos puts the company on firm footing to keep expanding in the booming online and sports gambling space. "Today CZR sits at < 3% digital market share, but we think this is poised to rise. ... To fund this transition, CZR now has a strong, cash generative land-based casino business that should deleverage rapidly and throw off meaningful cash flow," the note said. On the other hand, Wynn Resorts ' reliance on Macau appears to be hurting its rebound prospects, said Bank of America, which downgraded the stock to neutral from buy. "Despite China's swift COVID recovery, the Macau gaming market has been derailed by visa restrictions, virus flare ups and new policies that have impaired cross-border travel. Pre-COVID, Macau made up 70% of Wynn's EBITDA mix and is one of the higher China-exposed names in the US stock market," the note said. Caesars' stock has been volatile this year. Shares are up nearly 22% year to date but have tumbled more than 14% over the past three months. Wynn has also fallen sharply over the past three quarters and is now down 12% for the year. BofA kept its price target for Caesar's at $125 per share, 38% above where the stock closed on Friday. For Wynn, Bank of America cut its target to $105 per share from $130, representing 6% upside for the stock. -CNBC's Michael Bloom contributed to this report.

Signage reminds visitors "House Rules...Wear A Mask." outside Caesars Palace hotel and casino in Las Vegas, Nevada, U.S., on Sunday, May 02, 2021. Roger Kisby | Bloomberg | Getty Images