Las Vegas Sands (NYSE: LVS) experienced a modest rally on Friday following an upgrade from a sell-side analyst.
Jefferies analyst David Katz raised his rating on the Venetian Macau operator to “buy” from “hold,” and increased his price target on the stock to $69 from $60. This new target suggests a potential upside of almost 38% from current levels. Katz pointed to an improving Chinese economy as a potential catalyst for Sands stock in 2025.
“Although it is early stages and visibility into progress remains relatively low, we are confident that given LVS’ exposure to the mass segment, improvements to the macro environment will provide an outsized benefit for the company,” observed Katz.
Jefferies’ price target is based on Sands trading at 20x earnings, 12.5x price-to-free cash flow, and 11x enterprise value/earnings before interest, taxes, depreciation, and amortization (EV/EBITDA).
Upgrade at a Crucial Time
This upgrade is the first for Las Vegas Sands in 2025 and marks the second positive commentary on Macau casino equities early in the new year.
Jefferies’ optimistic view on Sands came after the stock gained barely more than 4% last year, underperforming the S&P 500 by a roughly 6-to-1 margin. Despite a challenging 2024 for Macau gaming equities, gross gaming revenue (GGR) grew to $28.3 billion, representing 24% year-over-year growth.
Katz expects Macau GGR to rebound to pre-pandemic levels by 2026, after reaching 80% of those highs last year.
Sands stands to benefit from this growth with upcoming upgrades at the Londoner Macau, set to be completed in the first half of the year. Additionally, potential targeted monetary stimulus from Beijing could boost consumer discretionary spending, benefiting Sands, which relies heavily on mass and premium mass patrons. The Jefferies upgrade contributed to LVS gaining 1.04% on below-average volume.
Additional Upgrades
The Sands upgrade was part of a series of adjustments by Katz on various gaming stocks, including Boyd Gaming (NYSE: BYD). The Orleans operator saw a 1.52% increase after being upgraded to “buy” from “hold” with a $92 price target, suggesting a 26.7% upside from today’s close.
Boyd Gaming operates 10 venues in Las Vegas and regional casinos in multiple states. Katz noted that the opening of Boyd’s temporary casino in Norfolk, Va. later this year could be a significant catalyst, and investors continue to undervalue the company’s 5% stake in FanDuel, the largest domestic online sportsbook firm.