After starting the year with a softened outlook, a couple of casino operators in Macau have just received a boost. Analysts with the Sanford C. Bernstein brokerage have revised their ratings for both Galaxy Entertainment Group and Sands China, basing their new position on the companies’ current valuations and forecasts capacity expansion.

Gross gaming revenue (GGR) in Macau is expected to slow considerably over the next 12 months. It grew 18% from 2017 to 2018, but is now predicted to only increase 3% over the next year. Despite this contraction, Bernstein said in its “Gaming 2019 Outlook” today that the overall picture for the casino industry in Macau remains positive.

According to the analysts, Vitaly Umansky, Eunice Lee and Kelsey Zhu, “On a longer-term fundamental view, Galaxy now looks relatively inexpensive, especially factoring in Phase 3 and 4 developments of Galaxy Macau.

“Galaxy continues to improve its Mass operations at Galaxy Macau and StarWorld while maintaining a leadership position in VIP. While the VIP segment is most at risk of considerable slowdown over the next 6 to 12 months, over the medium term, the key value driver is operating leverage improvement and improving business mix, which will enhance margins.