Bank of America Merrill Lynch downgraded its rating on Las Vegas Sands Corp. LVS to Neutral and lowered its price target from $72 to $67 in a report issued Tuesday.
Analysts led by Shaun C. Kelley believed that “Macau’s challenges are likely to last longer than we previously anticipated. Macau’s secular story remains powerful, but in our view the magnitude of 1) China’s anti-corruption campaign, 2) China’s economic slowdown and 3) new supply growth, may keep the stocks range bound longer than we had initially hoped.”
Recently, Sterne Agee took a different position and saw long-term gain opportunities in Macau.
Kelly concluded that the “combination of 1) a disappointing Golden Week (-30 percent vs. our estimated -25 percent), 2) weak VIP revenues in October’s second week and 3) expected disruptions from the smoking ban mean that now our 0 percent forecasts for 2014 and 2015 are at risk.”
“The downside case of a further/more sustained unwind in the VIP business seems more likely, and there is enough price risk (15-20 percent+) from current levels to put us on the sidelines before we feel comfortable arguing for valuation support,” according to the report.
Las Vegas Sands Corp. recently traded at $58.94, down 0.03 percent.
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