Las Vegas Sands (LVS) appears to be a victim of too high expectations. While the company beat on the bottom line, revenue came in below expectations and the stock is being punished quite severely for it. It seems a bit of an overreaction from this seat.
The stock has fallen to the lower end of a range it has been carving out for the past few months between $44 and $52, bouncing off the 50 day moving average today. While there is an ominous gap in the chart around $41 that could be filled, it will probably require the broader market to fall – which apparently has become an impossibility. So one could trade this one long versus the 50 day moving average and/or the $44 level. In a serious market correction a move down to the $37 to $41 would create a favorable long term entry point. Nearer term, if there is no correction, the stock is building a multi month base that once broken out to should lead to a very nice move, much like we experienced in 2010. [Sep 22, 2010: Nice Base Building in Las Vegas Sands]
Macau and Singapore continue to be the reasons to buy, although any meaningful U.S. economic recovery would obviously help the Las Vegas operations.
During the quarter, Las Vegas Sands earned 42 cents a share on an adjusted basis on revenue of $2.02 billion. Analysts were calling for a profit of 39 cents a share on revenue of $2.07 billion.
Macau once again posted strong trends, but it didn’t translate into a big enough revenue gain for investors. Sands China reported a 13% jump in revenue to $1.09 billion, while adjusted earnings rose 37% to $332.8 million.
“In general, we were very impressed by the Macau performance in the quarter and we believe the results reinforce our view that the market share declines in the fourth quarter were misleading,” Wells Fargo analyst Carlo Santarelli wrote in a note.
Its $5.7 billion Singapore flagship, Marina Bay Sands, which opened in April, generated EBITDAS of $305.8 million.
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