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Casino stocks show signs of life

Jan 7, 2009 7:54 PM
Staff & Wire Reports |

It’s probably too early to whisper words like "recovery" and "rebound," but gaming stocks so far this year have shown signs of life with Wall Street investors.

Las Vegas Sands (LVS), especially, is off to a wildly encouraging start as its shares gained back 45 percent on trading that pushed its volume through the roof.

The LVS gains followed 12 months of pummeling that left the stock at less than 10 percent of its 52-week high.

Wynn Resorts (WYNN) also enjoyed a solid first-week of trading.

Here’s an analysis from Jake Fuller of Thomas Weisel Partners LLC:

"Despite a slowdown in Macau gross gaming revenue last month, Las Vegas Sands Corp. and Wynn Resorts Ltd. are priced just right given recent estimate cuts.

"Gross gaming revenue, or gaming ‘win’ for Macau slipped 7 percent in December to $958 million compared with a 3 percent increase in November. Both Las Vegas Sands and Wynn Resorts have casinos located in the Chinese gambling enclave of Macau.

"We maintain our positive bias on both stocks on the view that current valuation appropriately discounts near-term estimate risk and we see material upside potential against recovered earnings in the 2010 and 2011 timeframe."

Note that Fuller also kept "overweight" ratings on Wynn and Las Vegas Sands, and also reaffirmed a $60 share price target on Wynn and a $13 price target on shares of Las Vegas Sands.

Las Vegas Sands also got an endorsement from Jeff Macke, founder of Macke Asset Management. He tabbed LVS as a stock "to watch," even though he adds that "comebacks are a killer, which is why we sought to avoid the sell-off in the first place – a fact to keep in mind as we get back in the swing."

Hopefully, the Vegas-based gaming stocks are back in the swing, but remember, you have to play the market we have, not the one we think we should have.

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