Where we’re headed: Some see more pain to come, while others think that the shares are oversold.

Casinos have had a tough time of late, with less-than-encouraging data from Macau buffeting the stocks. Little relief is in sight, warns Jefferies, although other firms are more optimistic.

Analyst David Katz was long a bull on the Macau-exposed casinos , until he wasn’t, downgrading Wynn Resorts(WYNN) last month to Hold amid ongoing disappointing data from the Chinese gambling hot spot. Gambling stocks have fallen as much as 30% since June.

On Monday, he reiterated a Hold rating on both Wynn and Las Vegas Sands(LVS), leaving MGM Resorts(MGM) as his only Buy-rated stock in the main Macau trio.

Katz writes that gross gaming revenue from Macau is off to a slower start this month than it was in August, growing 10% year over year, and 28% on a two-year basis. That’s a major slowdown from the 40% two-year growth that Macau had been achieving recently.

“Our sources suggest that the month is experiencing a slower pace post the summer months, although we view these estimates in light of the mounting risk from the weakness in the Chinese macroeconomic environment,” he writes.

Nor is that particularly welcome, given that higher year-over-year figures still met with investor skepticism earlier this year.

Katz writes that he’s still conservative on the shares. China’s difficult economic situation clouds their short-term prospects, while in the longer term, casinos will have to bid to renew their concessions, which could lead to a variety of outcomes.

As such, he argues that though the shares have been battered in recent months, they accurately reflect the risks facing the gambling companies.

Other analysts aren’t as pessimistic. JPMorgan’sJoseph Greff reiterated an Overweight rating on Wynn after meetings with management. He writes that there is a “disconnect between its current operating fundamentals and current investor sentiment (i.e., extremely negative on Macau and gaming, in general).”

In addition, Instinet’s Harry Curits argues that Wynn, MGM, and Melco Entertainment (MLCO) are all overbought at current levels. The shares have returned to 2015 levels, he notes, too low even given the recent disappointments.

Curits writes that several operators he spoke with in recent days said that revenue from VIP gamblers has been rising sequentially over the past six weeks. That could mean, he argues, that while growth in activity by high rollers is in a longer-term decline, the pace may be more moderate than bears fear.

Las Vegas Sands is up 0.8% to $61.08 and Wynn is climbing 3% to $132.23 this afternoon, while Melco is off 4.1% to $20.27. MGM is down 0.1% to $26.72.

Make the Connection

Hedge funds are still betting on Wynn. Macau hasn’t been the only issue however, there’s also earnings.

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