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Wynn Resorts' Net Falls Short; Macau Growth Is Constrained

Wynn Resorts (WYNN) reported weaker-than-expected Q2 earnings Monday on a disappointing Macau take. But shares edged up as investors bet on stronger growth.

U.S.-focused Caesars Entertainment (CZR) late Monday reported its third straight quarterly revenue drop and a worse-than-anticipated Q2 loss.

Wynn's earnings per share rose 9% to $1.51, 6 cents short of views. Revenue grew 6% to $1.332 billion, just missing Wall Street's $1.335 bil target.

In Macau, the casino region on China's southern coast near Hong Kong, Wynn's revenue fell 2.6% to $930.9 million.

Wynn shares rose 29 cents to 131.27 Monday.

Las Vegas Sands (LVS) last week said its Macau unit saw revenue jump 40% to $2.07 billion, due in part to Sands Cotai resort in Macau, which began a phased opening in April 2012. Sands shares slid less than 1% Monday.

Wynn is playing catch-up with a planned $4 billion resort in the Cotai strip, where Macau's newest casinos are sprouting. Wynn sees it on track to open in 2016.

MGM Resorts (MGM), the third big Vegas casino in Macau, edged up.

Wynn CEO Steve Wynn noted that his company accounts for 16% of overall Macau casino profits vs. its 10%-11% revenue share.

"That's the most important thing we're concerned with is the bottom line," he said.

Wynn's results were "acceptable," said Sterne Agee analyst David Bain. He rates Wynn as a neutral with a 130 price target.

RBC Capital Markets analyst John Kempf said Wynn continues to attract middle-class gamblers from China and high-roller VIPs from around the globe.

"They only missed because they are capacity-constrained" until the new Cotai casino opens, said Kempf, who rates Wynn an outperform with a 153 target.

Wynn revenue in Las Vegas rose 16.2% to $401.4 million.

Caesars doesn't own casinos in Macau but is the top operator in the U.S., where it faces stiff competition and slower growth.

Caesars lost $1.69 a share in Q2, better than a year earlier, but 12 cents worse than views. Revenue fell less than 1% to $2.16 billion, also below views.

Caesars is investing heavily to upgrade Vegas sites and gain a toehold in the emerging U.S. online gaming market. Earlier in July it said it's pushing ahead to split in two to help fund online gaming.

Caesars CEO Gary Loveman acknowledged "challenging conditions," but said "we are beginning to observe positive underlying trends resulting from the investments we've made.

Caesars shares dipped late, erasing a modest regular-session gain.

Boyd Gaming (BYD), with Vegas, Atlantic City and the Midwest properties, reports Tuesday. Analysts see a break-even Q2 and a 21% revenue rise to $741.4 million. Boyd shares fell 3%.