Las Vegas Sands (LVS) Downgraded to Hold at Jefferies on Limited Upside Potential
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Jefferies analyst David Katz downgraded shares of Las Vegas Sands (NYSE: LVS) to Hold from Buy with a price target of $40.00 per share (from the prior $60.00).
The analyst sees three key risks facing the company going forward, namely 1) persistent Covid restrictions, 2) pending uncertainties around the Macau concession, and 3) divestiture from the fundamentally positive US market without alternative avenues of growth.
The recent change in the Macau government policies presents a risk for LVS, given that the company generated 60% of its FY19 revenue from this region. LVS is also hampered by the current zero-tolerance policy for cases, which implies limited positive operating catalysts, argues Katz.
“The pending sale of the Veneian/Palazzo provides $5.05B of incremental capital that does not appear to have a higher growth opportunity for redeployment. New US license opportunities do not appear to be viable, while the commitment to digital gaming growth appears modest. We also note that the domestic gaming markets in general are in a fundamentally positive context, with strong demand and considerable profitability growth,” Katz said in a client note.
“We are assuming that VIP play remains in secular decline through 2023, reaching 50% of 2019 levels, with overall gaming revenue 12% below 2019. The result is that revenue and EBITDA for 2023 are 10% and 12% lower than our prior estimates and 25% and 20% lower than 2019. Our resulting revenue and EBITDA are 14% and 10% below consensus, respectively.”
A lowered PT reflects lower FY22 and FY23 estimates.
A downgrade from Katz comes just a day after JPMorgan analyst Joseph Greff downgraded from Overweight to Neutral with a price target of $38.00 (from $59.00).
Shares of the company are up 1.1% today.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst PT Change, Downgrades, Hot Comments, Hot Downgrades
Related EntitiesJPMorgan, Jefferies & Co
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