Key Points
- Las Vegas Sands, which does business in Macau and Singapore, has posted price gains in several recent rolling time frames
- Two analysts recently upgraded the stock or boosted their price targets
- Wynn Resorts, which also has properties in Macau, but more exposure to the U.S., is also seen pivoting to profitability next year, after pandemic slowdowns
Las Vegas Sands (NYSE: LVS) is on the verge of returning to profitability, following three years of pandemic-induced slowdowns.
Despite its moniker, the company actually owns casino and hotel properties in Macau and Singapore.
Especially strict lockdown policies in China meant Las Vegas Sands revenue was pummeled in the past two years.
It’s still the world’s largest casino company by market cap, checking in at $29.51 billion. In contrast, the more familiar (to Americans, anyway) Wynn Resorts (NASDAQ: WYNN) has a market cap of just $7.374 billion.
In terms of price performance, Las Vegas Sands is outpacing Wynn.
Las Vegas Sands has notched gains in the following recent time frames, despite broad market turbulence:
- 1 week: +8.44%
- 1 month: +4.69%
- 3 months: +15.07%
- Year-to-date: +5.50%
According to MarketBeat analyst data, Wall Street’s price target for Las Vegas Sands is $48.54, a 26.04% upside. Although the stock made an attempt to rally in February, it hit resistance at $48.27. It hasn’t reached $48.54 since July 2021, and at that point, it was on the way down.
Analysts have a “moderate buy” rating on the stock. In late September, Jefferies upgraded the stock from hold to buy, and Citigroup boosted its price target to $60 from $58.
That does appear promising for a turnaround at the company and the stock. Its three-year revenue growth rate is -41%, which makes sense for a company that’s logged no earnings since the pandemic started.
But as you see from the Jefferies and Citigroup upgrades, analysts are seeing signs of life. That’s also evident by the recent price increases.
On September 26, Morningstar analyst Dan Wasiolek wrote, “ Our forecast for a Macau demand recovery starting in November after China’s Communist party convention in October gathered momentum this past weekend, with the region planning to reinstate group and eVisa travel for mainland China (around 70% of pre-pandemic Macau visits) as early as late October.”
Wasiolek added that this move would at least double visits to Macau, which is known as a tourist destination in China and is sometimes dubbed “Las Vegas of the East.”
He noted that a full recovery by the end of 2024 is possible. In fact, according to data from FactSet, the consensus estimate for the full year of 2023 calls for Las Vegas Sands to earn $1.38 per share.
Meanwhile, Wynn Resorts, which also does business in Macau, is more familiar to Americans as the company behind the Wynn and Encore hotels and casinos on the Las Vegas strip. It also operates a resort hotel and casino on the Boston harbor.
Shares of Wynn have posted the following returns recently:
- 1 week: +4.33%
- 1 month: +7.11%
- 3 months: +12.18%
- Year-to-date: -21.50%
Analysts have a “moderate buy” rating on the stock, with a price target of $98.57, a potential upside of 53.18%.
Wynn, too, suffered through the pandemic amid closures and slowdowns in tourism. It reported losses in 2020 and 2021, and is expected to post a loss of $3.46 per share this year. Next year, that’s seen turning around, to $1.59 per share.
While the two companies are somewhat similar, they are not interchangeable. In other words, although they are in basically the same industry, they are not “substantially identical,” largely due to their differences in market cap, and one company’s exclusive focus on China, while the other has more exposure to the U.S. market.
If evaluating exposure to the casino industry, be sure to understand the differences between the companies’ business models and exposure to global regions.
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