Las Vegas Sands is a premier way to play Macao’s reopening, according to Morgan Stanley. Analyst Stephen Grambling named the stock a top gaming pick. His $71 price target implies an upside of 18.1% from where the stock closed Thursday’s session. “We see it being the best way to play Macau and one of the final consumer recovery stories coming out of Covid,” he said in a note to clients Friday. Gross gaming revenue for casinos in Macao continues to increase. Grambling expects the revenue metric to reach 2019 levels at one point this year after hitting 65% in June. That comes despite concerns of a slowing Chinese economy pushing investors to move cautiously on casino stocks with exposure there. He described Las Vegas Sands as “the best way to play the mass market.” Though the company has less focus on premium mass, he noted Las Vegas Sands has increased its mass market share to above Covid levels and continues to increase it even more, which Grambling said should be a positive going forward. And that’s only one reason to be optimistic about the company has heading into 2024, he said. Strong trends at its Singapore property, a clean balance sheet and potential for a downstate casino license in New York all create opportunities for positive optionality. An announcement of that downstate license or that the company is resuming dividends or doing a share buyback could be near-term catalysts for share prices to rise, Grambling said. He also noted the stock trades at 12.8 times its enterprise value to EBITDA ratio, which is below where it did before the pandemic despite a more modest recovery expected in 2024 when compared against 2019. Shares rose 1.8% in premarket trading on Friday. The stock has jumped more than 25% since the start of the year. LVS YTD mountain Las Vegas Sands, year to date — CNBC’s Michael Bloom contributed to this report.
