Las Vegas Sands is a Fresh Long Idea at Hedgeye

Shares of Las Vegas Sands (NYSE: LVS) were pointed higher in midday trading Monday amid talk that China will deploy bolder economic stimulus measures next year something a research firm believes could be a catalyst for the gaming stock.

Hedgeye added the casino name as a new long idea, noting the stock could present investors with upside of 20% to 30%. Analyst Sean Jenkins said Chinese stimulus efforts could be sparks for shares of Macau casino operators, including Las Vegas Sands, of Sands China.

While today’s news of potential stimulus measures across Mainland China will help the Macau sector, we have plenty of other reasons to be bullish on Macau and LVS in particular, Jenkins wrote.

By number of venues, Sands China is the largest operator in the Special Administrative Region (SAR) with five casino hotels. The company is also typically among the top two in terms of market share there, particularly among mass and premium mass players.

In late September and into October, Macau casino stocks rallied after the People’s Bank of China (PBOC) cut interest rates and Beijing announced a new round of stimulus measures targeting select segments of the Chinese population.

Those moves stoked hopes the country would unveil additional, to shore up the world’s second-largest economy, stoking domestic consumption and consumer spending that would likely benefit Macau’s gaming-dependent economy. However, those moves have yet to materialize, leading to some disappointment among market participants regarding Macau gaming equities.

With President-elect Trump returning to the White House, Beijing appears motivated to boost the Chinese economy. The Politburo said it could proceed with “moderately” looser monetary policy next year coupled with “more proactive” fiscal measures. Earlier this month, President Xi Jinping said China must do what it can to foster confidence in its economy and “actively build an external environment that is favorable to us.”

Specific to Las Vegas Sands, Hedgeye believes consensus estimates on Macau gross gaming revenue (GGR) are currently too bearish and that market participants are glossing over potential positive benefits integrated resort.

Jenkins added that investors are overlooking growth in Singapore where LVS runs Marina Bay Sands, which is one of the most profitable casino resorts in the world. Banks are currently shopping a massive loan the operator will use for expansion at the property.

The analyst also said market participants aren’t “appropriately crediting” Sands for its efforts to return capital to shareholders.

In October, the Las Vegas-based company boosted its quarterly payout to 25 cents per share from 20 cents, marking the first increase since the casino giant in August 2023. At the same time, Sands said it will repurchase up to $2 billion of its shares, signaling to investors that it sees value in the stock.