We maintain our Neutral recommendation on the U.S. based
Las Vegas Sands Corp.
). Although Las Vegas Sands' strong brand name and expansion
strategy will bode well for future growth, an uncertain economic
condition and heavy reliance on debt financing remains a spot of
bother for the company.
Why the Reiteration?
Las Vegas Sands, the leader in the gaming and lodging
industry, is well poised to grow with the gradual economic
recovery. Apart from the U.S. and Chinese markets, the company is
venturing into new emerging markets for further expansion, which
would help it to withstand any regional downturn.
With the rise in gaming volume as well as significant
contributions from the other non-gaming components, the company
continues to register higher revenue growth at its Macao
properties. Currently, it generates over 80% of its revenues from
this region. Moreover, we believe that Sands Cotai Central
project in Cotai Strip, when complete, will represent a
significant expansion of the company's Macao presence and will
drive its visitation, moving forward.
The company's business in the Las Vegas market seems to be
gaining traction after a weak quarter. With the rise in leisure
demand, the visitation pattern in the resort city is improving.
This Zacks Rank #2 (Buy) company is also concentrating on the
renovations and promotions of its Las Vegas properties in order
to augment its performance, going ahead.
Moreover, the company's business at Marina Bay Sands in
Singapore appears to be stabilizing. Mass revenues are showing
signs of improvement following the company's new marketing
programs and higher traffic growth.
Despite improving revenue growth prospects, the high debt
level keeps us on the sidelines.
Moreover, we are skeptical about the successful completion of
the company's European integrated resort project -- EuroVegas --
in Madrid, Spain as it is subject to various terms and conditions
of the government. Moreover, the company's recent suspension of a
high-rise residential condominium tower in the Las Vegas Strip
can weigh on the company's margin side in the coming
Las Vegas Sands' upcoming project at Cotai in Macao will be up
against other U.S.-based casino operators such as
Wynn Resorts Ltd.
MGM Resorts International
) that are also constructing casinos on the Cotai Strip. These
new openings may restrict the company's market share in the
region, going ahead.
Other Stocks to Consider
Another stock from the same industry with a favorable Zacks
Monarch Casino & Resort Inc.
) carrying a Zacks Rank #1 (Strong Buy).
LAS VEGAS SANDS (LVS): Free Stock Analysis
MONARCH CASINO (MCRI): Free Stock Analysis
MGM RESORTS INT (MGM): Free Stock Analysis
WYNN RESRTS LTD (WYNN): Free Stock Analysis
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