Firm bucks trend, downgrades Las Vegas Sands

Las Vegas Sands Corp. was down-
graded this week by a Wall Street investment firm, bucking a recent trend which has seen praise piled upon the casino operator, whose stock value is up more than 250 percent this year.

In a report to investors Wednesday, UBS Securities analyst Robin Farley said Las Vegas Sands, which hit a 52-week high of $55.47 a week ago, may have reached a ceiling, for now.

She told investors the stock might offer "a better entry point" at another time.

The report drove the stock price of Las Vegas Sands down $2.11 on Wednesday on the New York Stock Exchange. The company's stock price recovered somewhat Thursday, closing at $50.65, up 65 cents, or 1.3 percent.

Shares of Las Vegas Sands opened the trading session at $48.18 and fell as low as $48 in reaction to the report.

Las Vegas Sands has been Wall Street's darling this year. The company's casinos in Macau and its $5.7 billion resort in Singapore have driven earnings beyond quarterly losses reported a year ago.

In the recently completed third quarter, Las Vegas Sands reported net income of $168 million on revenues of $1.91 billion. The company's two Strip resorts, The Venetian and Palazzo, accounted for just 15 percent of the company's overall net revenues with the rest coming from Asia.

Farley told investors she estimated a growth in cash flow -- earnings before taxes and other accounting charges -- of between 14 percent and 15 percent next year from the company's casinos in Macau and Singapore, following what she expects will be a 50 percent hike this year.

However, other Wall Street firms have increased their estimates on the company, a reflection of recent financial results.

Farley predicted Las Vegas Sands could exceed $4 billion in cash flow by 2013, far above the potential $3 billion in annual cash flow predicted by company Chairman Sheldon Adelson.

Farley raised UBS' targeted stock price in Las Vegas Sands to $52, up from $44. She said the company is moving toward completing several projects that had been on hold along the Cotai Strip region of Macau, possibly by 2012.

"We do not see a shortage of positive catalysts, but at current valuations (we) believe many are reflected," Farley said.

Las Vegas Sands is now one of the casino industry's top turnaround stories after coming close to bankruptcy at the end of 2008 due to the falling economy and a drying up of credit markets.

The company's stock price fell below $1.50 a share in March 2009. In the past 52 weeks, shares have traded as low as $14.87.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.