Las Vegas Sands upgraded on Macau optimism

Posted: January 3, 2025, 03:37 pm.

Last updated: January 3, 2025, 03:37 pm.

Las Vegas Sands (NYSE: LVS) saw a modest rally on Friday after shares of the casino giant got an upgrade from a sell-side analyst.

Jefferies analyst David Katz raised his rating on the Venetian Macau operator to “buy” from “hold”, while raising his price target on the stock from $60 to $69. This means there is potential for an upside of about 38% from current levels. The analyst cited the possibility of an improving Chinese economy as a potential catalyst for Sands stock in 2025.

“While it is early stages and visibility of progress is relatively low, we remain confident that given LVS’s performance at scale, the improving macro environment will provide a major benefit for the company,” Katz said.

Jefferies' price target is based on Sands trading at 20x earnings, 12.5x price-to-free cash flow, and 11x enterprise value/earnings before interest, taxes, depreciation and amortization (EV/EBITDA).

Las Vegas Sands upgrade comes at critical time

The upgrade of Las Vegas Sands is the first in early 2025 and at least the second positive comment on Macau casino equity early in the new year.

Katz said he expects Macau GGR to reach pre-coronavirus pandemic levels in 2026 after reaching a high of 80% last year.

Sands London is set to capitalize on that growth with upgrades in Macau, which will be finished in the first half of this year and if Beijing unveils more targeted monetary stimulus that could boost consumer discretionary spending. Such a move could prove worthwhile for Sands because in Macau, the operator relies heavily on mass and premium mass patrons. The Jefferies upgrade helped LVS gain 1.04% on below-average volume.

Another Jefferies upgrade

The Sands upgrade was part of a number of adjustments made by Katz on various gaming stocks, one of which was Boyd Gaming (NYSE: BYD). The Orleans operator jumped 1.52% today after I upgraded shares from “Hold” to “Buy” with a $92 price target, representing a 26.7% increase from today's close.

Las Vegas-based Boyd operates 10 gaming venues in its home market, including Aliante, California, Cannery, Fremont, Gold Coast, Joker's Wild, Main Street Station, Sam's Town, Suncoast and The Orleans. It also operates regional casinos in Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Pennsylvania.

Katz said the opening of the operator's temporary casino in Norfolk, Va., later this year could be a spark for shares, adding that investors are underestimating the company's 5% stake in FanDuel — the largest domestic online casino. Sportsbook firms.