Las Vegas Sands has been added to Deutsche Bank's list of new funds
Las Vegas Sands Corp. (NYSE: LVS ) has been named to Deutsche Bank's new funding list for the first quarter of 2024. This is a group of stocks the research firm is confident about heading into the new year.
The largest casino operator by market capitalization was one of nine consumer stocks selected and the only gaming player in the group. That adds to a flurry of bullish calls for the Venetian Macau operator, which has recently gained attention as one of Wall Street's top gaming ideas for 2024. LVS shares are up just 1.73% year to date, lagging far behind at 24.31%. Returned by the S&P 500 Index.
We believe LVS stock offers great value at current levels and believe some concerns about Macau’s recovery path are misplaced due to too much reading into short-term data points," Deutsche Bank analyst Carlo Santarelli ( Carlo Santarelli wrote in a note on Wednesday. “We see the situation rationalizing over time and believe LVS represents a compelling proposition from both a fundamental and valuation perspective. long-term thinking. "
The analyst noted that Macau's continued growth prospects could be an attractive feature for investors with domestically focused, consumer-focused portfolios. Sands currently does not operate casino hotels in the United States. This could be beneficial given expectations that U.S. consumers will spend less on gambling next year.
Headwind “understanding” between China and Macau
Macau has recovered from China's worst coronavirus restrictions this year. But five of the six franchises, including Sands China, saw their share prices fall sharply, and only MGM China posted a small profit.
This means that stocks, including Sands China, currently trade at a significant discount to earnings and are priced out of line with strong trends in Special Administrative Region (SAR) gross gaming revenue (GGR). These low valuations may be a sign that investors are annoyed by the operators' heavy real estate investments and are worried that China's economic weakness could hamper gambling spending.
Santarelli believes these factors are known and understood, adding that previous periods of economic weakness in China have not put pressure on spending in Macau.
"Obviously, the growth prospects offered by Macau-focused stocks have not been the reason for investor interest recently. However, we do not believe the market outlook will change significantly, if at all, and LVS stock offers an attractive strong investment opportunities," the analyst noted.
Las Vegas Sands Offers 'Great Value'
Santarelli acknowledged that Las Vegas Sands stock currently represents "tremendous value," adding that both LVS and Sands China shares are cheap by historical standards.
The analyst also highlighted the operator's efforts to reward shareholders, including the reinstatement of its quarterly dividend and its recently announced $2 billion share buyback program, the latter of which could provide some support for the falling share price.
"Management noted that it has historically split capital gains 80/20 with dividends and buybacks. But given current equity levels, LVS expects buybacks to exceed dividends going forward," Santarelli concluded. "As a reminder, LVS currently pays an annual dividend of approximately $0.80, which equates to approximately $600 million per year. Given that the current valuation is 10.3 times our 2024 Adjusted EBITDA expectations and 9.1 times our 2025 Adjusted EBITDA expectations times, we expect LVS to be active in repurchases in the early stages."
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Source: www.casino.org
