Posted on: Aug 14, 2021 at 1:54 am
Last updated: August 14, 2021, 01:54 am.
Las Vegas Sands (NYSE: LVS) stock is down 33 percent since the start of the year, and it’s not just one of the worst-performing gaming stocks.
The Venetian Macau. A market strategist says Las Vegas Sands stock can rebound. (Image: South China Morning Post)
It’s more than 40 percent below its 52-week high and is the only member of the S&P 500 to lose at least 30 percent in 2021 and one of only six to see declines of 20 percent or more since the start of the year. Despite these ominous statistics, at least one market strategist believes the London-based Macau operator can recover.
We’re looking for a little Lady Luck here and looking at Las Vegas Sands. I mean, it could be so bad it could be good, ”said Craig Johnson, chief market technician at Piper Sandler, in a recent interview with CNBC.
Johnson’s call for LVS stock comes as the stock closed just below $ 40 on August 13. That’s above this month’s worst, but gaming stock is still at its lowest levels since the coronavirus pandemic began last year that crippled its operations in Macau and Singapore.
Courageous call on LVS shares
For investors, Sands has what it takes to be a contrary game. While it is still the largest domestic game of chance by market cap, it has no US stores following the sale of the Venetian, Palazzo and Sands Convention Center on the Las Vegas Strip earlier this year.
That leaves the operator vulnerable to the still slow rebound in Macau and Singapore – the company’s two largest markets, and that lethargy explains why some analysts became wary of the stock after the weak second quarter results.
Macau, the world’s largest casino hub, is still grappling with a plethora of travel restrictions and a recent spike in COVID-19 cases in mainland China, keeping tourists away from the Special Administrative Region (SAR). Additionally, Marina Bay Sands (MBS), the company’s property in Singapore, was recently closed for a thorough clean due to the emergence of a coronavirus cluster there.
“This is a stock that has already been in tremendous pain. Yes, over 80% of the revenue comes from Singapore and Macau, so there are clear challenges there with further lockdowns related to Covid. But at some point Covid will pass and we’ll see these gambling centers open up again, “said Johnson.
How sand can straighten the ship
Aside from the rallies in Macau and Singapore, Sands has a few other levers to restore investor confidence. That includes finding new US markets, although bets on New York and Texas haven’t paid off yet.
Additionally, the operator could finally venture into online gaming and sports betting – two fast-growing segments that are largely absent. Last month, Sands created a digital gaming investment arm, but no transactions are known on this front, while business in this space has been growing rapidly in the past few weeks.
With one of the industry’s stronger balance sheets, Las Vegas Sands could also restore its dividend or buy back shares to signal investors that management is confident about the stock.
