Analyst Identifies Potential Catalysts and Momentum for Las Vegas Sands Company
Las Vegas Sands (NYSE: LVS) shares are attracting Wall Street attention even after reporting solid second-quarter earnings results. One analyst, Steven Wieczynski from Stifel, maintained his "buy" rating on the stock and increased his price target to $78 from $73, which could represent a 30.7% upside from the previous close. The analyst sees potential in the Macau and Singapore markets as they continue their post-pandemic rebound.
Wieczynski believes that the Chinese market's recovery is still in its early stages as the average Chinese consumer is 18-24 months behind their American counterparts in terms of resuming spending habits. July could be the best month for Macau's gross gambling revenue (GGR) since January 2020, with GGR potentially returning to pre-pandemic levels in 2019 before the year's end.
Macau's recovery began in earnest earlier this year when the Chinese government eased COVID-19 restrictions. Although VIPs have not fully returned, Sands' return to profitability in Macau comes largely from the mass and premium mass market segments. The company's Sands China division reportedly generated $200 million in EBITDA last month, even though June is typically a slow period for Macau tourism.
According to Wieczynski, the high savings rate among Chinese citizens and concerns over China's economic slowdown may not detract from Sands' growth potential. The company's minimal U.S. presence reduces the impact of potential economic slowdowns in the U.S., including a potential curb in consumer spending.
Apart from its Macau success, Sands plans to revive its dividend with a quarterly distribution of 20 cents per share. While the dividend doesn't offer remarkable returns (1%), Wieczynski speculates that this is just the beginning of a more significant capital return program incorporating both dividends and share repurchases. Wieczynski also notes that Sands may have higher capital spending plans for Macau in the coming years and could consider entering new markets like New York, potentially boosting shareholder rewards.
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Source: www.casino.org
