Near-Term Pullback In Las Vegas Sands Shares Creates Buying Opportunity

Stifel maintains its Buy rating on Las Vegas Sands Corp. (NYSE: LVS), saying the positive Macau trends should drive upside in shares. Additionally, the firm said the recent pullback in shares creates a buying opportunity.

Macau operators should generate higher gross gaming revenues in 2017, and the brokerage believes Las Vegas Sands, with its focus on mass market, is a key beneficiary of this favorable trend.

Las Vegas Sands And Macau

“LVS remains our preferred way to acquire Macau exposure, as we believe the company’s significant scale advantages and diverse product offering position it to outperform the competitive set in Macau, particularly as mass market gaming trends continues to gather momentum,” analyst Steven Wieczynski wrote in a note.

Further, Wieczynski still expects Macau’s mass growth will far outpace VIP growth and positive Macau trends could offset China’s macro concerns and their impact on gaming trends in Macau, resulting in potential multiple expansion on Las Vegas Sands shares.

Despite the UnionPay overhang, the analyst believes the asset’s mass appeal and consistent cash flow, a relatively underleveraged balance sheet, and Macau asset base should enable the company to return cash to shareholders.

Analyst's Take

The analyst believes Las Vegas Sands could potentially increase its recurring dividend ($2.92/year, 5.3 percent yield) closer to $3.25 sometime between now and year-end.

The analyst also raised his 2017–2018 Macau property level EBITDAR estimates to $2.95 billion/$3.08 billion from $2.86 billion/$2.97 billion.

In addition, Wieczynski now expects the company to generate 2017/2018 EPS of $2.90/$3.06, up from prior estimates of $2.75/$2.90.

At last check, shares of Las Vegas Sands rose 2.51 percent to $56.67. The analyst also raised his target price by $1 to $66.

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