Las Vegas Sands faces Macau, Las Vegas pressures

Feb 13, 2009 3:00 AM
Staff & Wire Reports |

Las Vegas Sands Corp. will likely face continued pressure this year due to anticipated ongoing softness in both the Las Vegas and Macau markets, an analyst said Thursday.

Late Wednesday the Las Vegas-based casino operator reported a fourth-quarter loss of 27 cents per share on revenue of $1.09 billion.

Analysts polled by Thomson Reuters, whose estimates generally exclude one-time items, forecast profit of 4 cents per share on revenue of $1.17 billion.

Shares of Las Vegas Sands shed 45 cents, or 11.3 percent, to $3.53 in Thursday morning trading. The stock has traded in a 52-week range of $2.89 to $95.26.

The casino industry has struggled as consumers curb discretionary spending due to the continued housing downturn, increased food costs, eroding credit and unemployment concerns. Aside from the consumer spending pullback, the Nevada market has been among the hardest hit by the nation's real estate woes while Macau contends with tightened visa restrictions.

JPMorgan's Joseph Greff said in a client note that he was hard pressed to find any near-term catalyst or change in investor sentiment that would push the stock higher.

The analyst maintained a "Neutral" rating, saying he expects similar soft results from peers MGM Mirage and Wynn Resorts Ltd. when they report earnings later this month.

Robert LaFleur of Susquehanna Financial Group said the company's weak performance was not shocking given the expected softness of Las Vegas and Macau, but the markets did disappoint more than expected.

"Las Vegas results were awful considering the fact that the entire Venetian/Palazzo complex was open and operating in the fourth quarter, while the Palazzo opened very late in the fourth quarter last year and contributed very little financially to the quarter," LaFleur wrote.

The Four Seasons Macau's 32 percent occupancy rate also did little to impress, he added.

LaFleur reiterated a "Neutral" rating.

Despite the lackluster quarterly performance, Lawrence Klatzkin of Jefferies & Co. remained upbeat on the Sheldon Adelson-led Las Vegas Sands, saying the company could see gains from some asset sales and the opening of the $5.4 billion Marina Bay Sands in Singapore later this year.

Klatzkin said he feels the stock represents a buying opportunity, but cut the company's price target to $14 from $19 on more conservative estimates and valuing of future assets.

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