LVS shares stung by weak earnings, analysts become worried

Posted on: July 22, 2021, 9:54 a.m.

Last update on: July 22, 2021, 9:54 a.m.

Las Vegas Sands (NYSE: LVS) shares slumped Thursday, probing the lowest levels since February after the games company posted disappointing second quarter results on Wednesday night.

LVS shares
Marina Bay Sands from Las Vegas Sands in Singapore. The weakness of the Asian markets weighs on the title. (Picture: Straits Times)

The largest casino operator by market capitalization lost 25 cents per share on a generally accepted accounting principles (GAAP) basis in the June quarter on revenue of $ 1.17 billion. Analysts had expected a loss of 19 cents a share on sales of $ 1.37 billion.

The pessimistic report is the latest sign of a still slow recovery in Macau and Singapore, the company’s two biggest markets. While there are promising signs in Macau, “pandemic-related travel restrictions continued to impact our performance,” Sands CEO Rob Goldstein said in a conference call with analysts.

To compound these issues, Marina Bay Sands (MBS) in Singapore is closing today for a “deep clean” and will remain closed until August 5. Earlier this year, city-state health officials said they had identified a cluster of nearly a dozen. new cases of coronavirus, each of those people being either employees or visitors of MBS.

Goldstein adds that he’s confident Macau and Singapore will recover, but the timing on that is murky.

Analysts try to stick with LVS stock

Amid Sands soon to have no exposure in the United States and slow, contested coronavirus recoveries in Asian markets, analysts are cutting valuations on LVS stock, but they’re not giving up outright. name.

T“Macau / Singapore’s recovery continues to be a slow and painful process with very little clarity as to when the market will return to normal,” Stifel analyst Steven Weiczynski said in a note. “At this point, we think it makes sense to be as careful as possible with our short and long term estimates.”

Its forecast for real estate earnings before, interest, taxes, depreciation and amortization (EBITDA) of $ 4.6 billion on LVS in 2023 is lower than the company’s estimate of $ 5 billion to $ 6 billion. He still has a “buy” rating on the stock with a price target of $ 65, which implies a 32% rise from the July 21 close.

Jefferies analyst David Katz, who rates LVS stock as a “buy” with a newly adjusted price forecast of $ 60, says the name is now a game of value.

“Equities have, in our view, become primarily a game of very gradual recovery and investing in Asia and increasing returns on capital over time rather than compound value of past periods. We rate asset sustainability and cash generation as key attributes, ”Katz said.

Catalysts for LVS Stock

Barring a rapid recovery in Macau and Singapore, LVS stock could run out of upside sparks in the near term, although that scenario may change. Macau’s gross gaming revenue continues to follow the right direction and if a travel bubble with Hong Kong is established.

Looking further, the company recently announced the creation of an investment unit dedicated to digital games – an aspect of the business the operator was absent from.

Additionally, Goldstein told analysts on the conference call that Sands remains committed to bringing an integrated resort to Texas and there is talk of being involved in a similar effort in Florida, although these are projects to longer term.

Source link