Should I Buy Las Vegas Sands (LVS)? Finance YouTuber Analysis

The analyst suggests avoiding Las Vegas Sands despite its profitability and cash flow generation because it is losing market share in Macau, growing slower than the overall market. The current valuation, around nine times Enterprise Value to adjusted EBITDA, is considered reasonable but not cheap enough to justify the declining market share trajectory.

“what I think the response today is that we are seeing Las Vegas Sands lose market share and if that continues shares could continue to be under pressure because at the end of the day buying back4 $500 million worth of stock isn't that big a deal when you have a market cap in excess of $30 billion”

Travis Hoium suggests Las Vegas Sands as a primary beneficiary of Macau's recovery, noting that the company sold its US properties to focus on Macau and Singapore. He argues that if Macau's gambling revenue recovers to or exceeds pre-pandemic levels, similar to Las Vegas, LVS could see significant cash flow increases, which could be returned to shareholders through buybacks or dividends.

“The biggest operator in Macau is Las Vegas Sands... if we overshoot record revenue from pre-pandemic we could see these stocks move sharply higher.”

The analyst believes Las Vegas Sands is poised for significant upside as the Asian gambling market, particularly Macau, thaws after prolonged COVID-19 restrictions. They argue that the stock is still down from pre-pandemic levels despite a strong recovery in other markets like Las Vegas, and that the company's focus on high-margin Macau and Singapore operations, combined with a recent concession extension and investment commitments, positions it for a 'flood of business' and a potential return to a strong dividend.

“I just I generally think that there's going to be a big recovery in the regions that they're operating in and we haven't seen it yet and the fact that the stock is still down...”

The analyst believes Las Vegas Sands could double if Macau's gambling revenue recovers to 2019 levels, driven by a potential opening of the Chinese economy and relaxation of zero-COVID policies in 2023. The stock is currently undervalued as investors are not pricing in a significant recovery.

“I think Macau would be a region that really benefits three stocks that I think could reasonably double in 2023 and 2024 because of the benefit of Macau is Las Vegas Sands, Melco Resorts and Wind Resorts.”

The YouTuber is buying Las Vegas Sands, viewing it as a longer-term bet. He notes the company's recent sale of its Las Vegas assets, which will allow it to focus on international resorts where he sees more growth. He expects strong growth once COVID-related travel restrictions ease in Asia, despite current low traffic levels in Macau.

“In the consumer space we're adding Las Vegas Sands, ticker LVS, and this is a really interesting one because of a recent sale agreement. LVS is the world's largest operator in integrated resorts and casinos with sites mostly in Vegas, Macau and Singapore.”