Weather reports were adverse for Las Vegas Sands today, as J.P. Morgan analyst Joseph Greff reduced his price target on the stock, citing typhoon-dampened tourism to Macau. Greff took his year-end price target all the way down from $71 per share to $64. He also ratcheted third-quarter cash-flow predictions back from $628 million to $601 million. Sands operates only in Macau and Singapore.
Greff wrote that his new expectations for Macau were for gambling revenue of $1.7 billion this month, an 18 percent decline from September 2022, and $5.9 billion for the quarter, up five percent. He didn’t, however, foresee any loss in market share for Sands.
The analyst was also more conservative in his fourth-quarter forecast, projecting $670 million in cash flow, down from the previous $727 million. Looking ahead, he predicted Macanese cash flow of $2.9 billion, reduced from $3.1 billion for all of 2024. Projections for Marina Bay Sands in Singapore remained unchanged.
Greff stayed with an “overweight” rating on LVS, citing “recent underperformance in the stock,” which is down 19 percent since August 1, “well below peers,” as well as a Standard & Poor’s index that is only off three percent.
“The optimistic scenario is that our Macau estimate changes today prove conservative (which we are embracing), while our Singapore estimates continue to have some positive bias, given improving foreign visitation into that market,” Greff wrote. “That said, China macro/geopolitical risk and uncertainty are likely to be the single biggest factor in moving investors’ perceived investability in LVS and Macau stocks in general.”
Greff concluded by saying that he would not be surprised to see Sands counter the torpor in its stock price by reviving its dormant stock-repurchase initiative. He also encouraged insiders such as Dr. Miriam Adelson to acquire more shares, saying, “We’d welcome that.”
