Two resort and gaming stocks are less attractive now that the market has better priced in a recovery in a popular gaming destination, Jefferies said. Analyst David Katz downgraded Las Vegas Sands and Wynn Resorts to hold from buy. Katz lowered his price target on Las Vegas Sands by $4 to $65, still up 11.1 percent from Wednesday’s close. He also lowered his price target on Wynn shares by $21 to $114, which currently implies an upside of 10.4%. Both mark a reversal from September’s escalation. Katz said that while Macau is in the early stages of recovery, recent inspections have shown activity levels have slowed, while a tight labor market has eased. “In both cases, we believe the bullish growth argument remains,” he said in a note to clients on Thursday. But “while Macau’s recovery is still in its early stages, we believe the market is more responsive to these dynamics It is relatively well understood and is broadly priced in at current levels.” He said it was unclear how important gaming gross and mix would be in the post junket market, although revenue levels were lower than in 2019. Margins are higher. Gross gaming revenue will reach 60% of 2019 levels by May 2023, as 46% of its total market in 2019 came from VIP-centric junkets, he said. He said he expects Las Vegas Sands’ EBITDA margin to grow 29% in 2024 and Wynn’s 52%. Katz added that estimates have largely caught up to the stock price, so valuation is more of a concern. Despite the stock downgrade, Katz noted that investors should hold onto rather than add to their holdings. Compared with September, Macau’s recovery is less attractive, although both companies should continue to be helped by developments and be poised to earn strong returns on capital, he said. Outside of Macau, Katz said the Las Vegas business should continue to help Wynn, while Singapore is a strong region for Las Vegas Sands. Wynn shares fell 2.6 percent in premarket trading Thursday. — CNBC’s Michael Bloom contributed to this report.