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Las Vegas Sands in Search of Share Price Stabilization

Well off its 52-week high, with a bearish earnings per share trend, and negative analyst commentary, Las Vegas Sands Corp. (LVS) shares are searching for some bit of stabilization. As recent as Mar. 19, Goldman Sachs along with Jefferies & Co. jumped on the casino sector bearish bandwagon. According to Reuters, Goldman analyst Steven Kent did not make any changes to the companies’ earnings forecasts, but he did express his view on what he called a challenging environment made difficult by more limited growth prospects and an increasingly “squeezed” consumer that has begun to impact revenues on the Strip. As a result, Kent reduced his price target for Las Vegas Sands, albeit slightly, from $110 to $100. Kent’s sentiment has certainly been a confirmation of the short seller thesis of a recession greatly hurting casino stocks, evidenced by Las Vegas Sands 33.9% slump thus far year to date, on top of the substantial share price drop in late 2007. The drop coincides with a fall in the major market averages; the Dow Jones has a negative return of 7.31% and the NASDAQ has a 17.4% decline so far this year. But it’s not all bleak. At the same time, the drop in shares has made the once overly-rich multiple stock much more palatable and may intrigue long term investors looking to step in at reduced price levels. Forward PE stands at a more paltry 44.5 and is now comparatively reasonable to what it was given that reduced estimates still show rather impressive earnings rising from $1.73 per share to $2.58 over the next fiscal year. And note the long term growth story is still viable with new casino expansion and the growing Macao market. The technical picture is looking better than it has in a while as well, with the short term action perhaps indicating a double bottom. The stock did in fact make a new 52-week low of $70 intraday on Mar. 17, but it did not close below the previous low of $70.70. Furthermore, volume was significantly light on the move to the downside and the stock has since recovered, bouncing to close at $76.96 Friday. An uptick in volume would confirm the bottom has been put in and assuring a rise close to $80 and a near term test of the 50-day moving average at $83.26.

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