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06/17/21 02:42 PM EDT
Takeaway: Current snapshot of our highest conviction calls + ideas list changes.


  • Reiterating our bullish views on WYNN, MLCO, MGM, RRR, and BKNG – all are Best Idea Longs
  • Incrementally more bullish on NCLH
  • Reiterating our bearish views on MAR and CCL – both are Best Idea Shorts
  • Incrementally more bearish on US regional gaming (ex. LV locals), and US hotel REITs of both the full and limited service variety
  • Other Changes: Removing STAY from our Best Ideas Long list due to softer industry demand and catalyst timing uncertainty  


  • Macau
    • WYNN, MLCO:  Reiterate positive near term view on Macau stocks with WYNN and MLCO as our go to horses; WYNN recently elevated from our “Switzerland” bucket.  Recent Mass Tracker indicates that WYNN and MLCO were likely mass market share gainers in Q4, with WYNN likely performing ahead of most expectations. 
    • LVS, Galaxy:  Reiterate Long bias on LVS, but remain cautious on the near term given construction disruption and the prospect of potential share losses in 1H 2020.  Maintain bearish bias on Galaxy as they lose share on both the VIP and Mass side – will revisit in the coming weeks as a Best Idea IF Macau trends stop improving.    
  • US Regionals
    • RRR:  Reiterate bullish long term view on RRR; best supply/demand story in US gaming, NTM>LTM, de-levering the balance sheet, show me stock with great fundamentals, and very little long term upside currently discounted in the stock.  
    • PENN, BYD:  Getting more bearish on US regional gaming ex. LV Locals. Q4 should likely be in line, but Street expectations for margins remain too high for 2020 and 2021.  Flattish top line growth becoming increasingly hard to leverage. 
  • LV Strip
    • MGM:  Reiterate positive 2020-2021 LV Strip thesis via Best Idea Long MGM; robust RevPAR growth and EBITDA growth story still undervalued even after the move.   


  • C-Corps
    • MAR:  Reiterate Best Idea SHORT MAR and bearish bias towards hotel development.  MAR is likely to miss NUG targets in 2020, RevPAR remains sluggish, stock is over owned and trading at a significant premium in the context of RevPAR softness and unit growth underperformance. See 20-25% downside from current levels. 
    • STAY:  Taking the L and removing potential turnaround story, STAY from our Best Ideas Long List due to continued weakness in the economy and limited service segment. Regime change at the management level should lead to improved operations + solid capital return picture, but top line trends are likely to keep a lid on the stock for now.   
    • HLT:  Arguably the best of breed with respect to Net Unit growth execution, but the stock is well ahead of itself in the context of still slowing RevPAR and industry wide construction pipeline activity.    
    • WH:  Recently added to our coverage list with a bearish bias. WH is Not immune to hotel development risks akin to other C-Corps, but WH should feel the brunt of new conversion competition in 2020 and beyond (OYO) and will likely need M&A to fuel growth as the core brands remain relatively challenged. 
    • H:  Uniquely positioned to drive outsized unit growth for the coming years, given its smaller size and growth brands that are resonating with developers. Core franchise business is undervalued relative to peers, despite better growth prospects and recent execution.  Pruning of their owned portfolio should allow for elevated capital return.        
  • REITs
    • XHR, PK:  Moving PK out of our Switzerland bucket and over to our SHORT bias list.  Despite the YTD drop (following the year end ramp), most Full Service REITs look richly valued when considering the prospect of a further deceleration in RevPAR growth + relentless OpEx pressures, all culminating in little to no EBITDA or cash flow growth for the foreseeable future.  We would need to see earnings expectation come down another notch before considering a more positive view, and potentially a haircut of another multiple turn. 
    • Limited Service REITs:  Reiterate cautious stance towards RLJ and other Limited Service players as their woes on the RevPAR side are even more prevalent than most Full Service players.


  • Cruise
    • CCL:  Reiterate Best Idea SHORT CCL.  Early WAVE season pricing indicates continued weakness in their problem areas of (Europe and Alaska), but the Caribbean appears to be falling behind as well.  Net yield guidance doesn’t appear conservative if our data continues to trend in the current direction.  Management’s 2020 EPS guidance is overly dependent on Fuel and FX, two areas that are well out of their control. 
    • NCLH:  Reiterate Long bias towards NCLH.  Warming up to what could be a solid 2yr FCF growth story, with steady yield growth.  Awaiting more data from our WAVE season pricing survey (run weekly), but early indications are positive, and NCLH could be up for a good 2020.  More to come.     
    • RCL:  Reiterate Long bias towards RCL.  Well positioned from a pricing and bookings perspective for 2020, but expectations have been ratcheted up somewhat.  Awaiting more data from our WAVE season pricing survey (run weekly), but indications remain positive for 2020 ticket prices.      
  • OTAs
    • BKNG:  Reiterate Best Idea LONG BKNG.  Recent data tracker update suggests Q4 Room Nights should beat expectations, again.  Despite sluggish macro growth, FX headwinds, and industry issues (felt almost exclusively by others), BKNG continues to execute.  Superior growth earnings growth algo and capital return potential should begin to garner more attention by the GARP community.  See significant upside to shares of BKNG over the NTM, drive by positive earnings revisions + eventual multiple expansion.
    • EXPE, TRIP:  Reiterate our cautious view towards both EXPE and TRIP that we established at the outset of our OTA sector launch in July.  GOOG SEO related headwinds are real for both but the path towards unwinding those headwinds could be extensive, or potentially come at a high cost.  Management shakeup at EXPE has received a favorable reaction, but the operational turnaround won’t happen overnight. TRIP could be an acquisition target for someone, but with other industry players actively cultivating their own unique review content, TRIP’s appeal continues to diminish.


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