On the heels of expansion plans currently being undertaken by both Galaxy Entertainment Group Ltd. and Melco Crown Entertainment Ltd., investment bank Morgan Stanley has revised the price targets for both companies in what can be best described as a positive development for both Galaxy and Melco Crown.
In the case of Galaxy Entertainment, Morgan Stanley revised its price targets from HK$29 to HK$39, a positive uptick that is largely attributed to the operator’s massive expansion plans in Cotai. This expansion includes a $6.5 billion plan to expand Phase 3 of its Cotai Strip operation that would include a 10m-square-foot space to a number of retail and entertainment options, including a 10,000-seat concert arena, a 2,000-seat theater, and a shopping mall.
The inclusion of the new expansion plans in the investment bank’s base case was the primary reason Morgan Stanley revised its price target for Galaxy, as explained by analysts Praveen K. Choudhary and Katherine Sun. The two also noted that Galaxy’s expansion plans, which the latter expects to be completed by 2016, will be able not only attract significant returns for its shareholders, but more importantly, will support “sustainable earnings growth of 20 percent per year.
Meanwhile, Melco Crown also received a significant boost in confidence from Morgan Stanley after its two analysts, Choudhary and Sun likewise revised the casino operator’s price target from US$17.50 to US$29 on the back of expectations that the company will likewise experience growth in addition to favorable expectations for a pair of casino operations in the Philippines and Studio City.
News of Morgan Stanley’s renewed confidence in Melco comes a little over a week after two of its Macau casinos, Altira Macau and the City of Dreams’ Crown Towers, were bestowed Five-Star Hotel Awards from the 2013 Forbes Travel Guide. Keep the good news rolling, right?