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On Tuesday, CFRA downgraded shares of Las Vegas Sands Corp (NYSE:LVS) from Buy to Hold, adjusting the price target to $51 from the previous $55. The revision reflects a cautious stance on the stock's future performance, taking into account the company's reliance on the Macao and Asia markets and the recent rapid increase in share value.
According to CFRA, the new price target is based on an 11.0x multiple of the firm's projected 2025 EBITDA, which is a midpoint between Las Vegas Sands' one- and two-year average forward EV/EBITDA multiples. This valuation acknowledges Las Vegas Sands' above-average margins and growth compared to its peers. Nonetheless, the analyst suggests that the recent surge in the company's shares, following stimulus news from China, has balanced the risk-reward equation.
Las Vegas Sands' stock is currently trading at 10.5x forward EBITDA estimates, which CFRA deems fair and above the average of its peers. However, the firm points out potential risks associated with the company's heavy dependence on its operations in Macao and Asia. Should the growth in these regions remain subdued, Las Vegas Sands could face challenges.
The stock has experienced a significant upswing, with a more than 30% increase in less than a month, prompting CFRA to believe that investors may have already factored in a substantial recovery of the Chinese economy. In light of these developments, CFRA recommends investors to consider other companies within the industry that boast a more geographically diversified portfolio of properties, beyond just Macao and Singapore.
In other recent news, Wells Fargo has expressed bullish sentiments on Fair Isaac (NYSE:FICO) Corporation, anticipating significant increases in score prices across multiple sectors. Similarly, Las Vegas Sands Corp is expected to have an attractive fourth quarter, as per Wells Fargo's projections. The firm also highlighted TC Energy (NYSE:TRP) Corporation's potential for stock appreciation post-spin of its Liquids business.
Wells Fargo also noted Willis Towers Watson (NASDAQ:WTW) as undervalued, predicting potential stock growth due to upcoming third-quarter earnings and an investor day in December. The firm also expressed confidence in Annexon, Inc., Arvinas, Inc., and Axsome Therapeutics (NASDAQ:AXSM), Inc., anticipating positive clinical data. On the other hand, Wells Fargo maintains an Underweight rating on Tesla (NASDAQ:TSLA), Inc., citing expected decline in auto gross margin.
Myriad Genetics (NASDAQ:MYGN) recently reported second-quarter revenues of $211.5 million, exceeding consensus expectations, and raised its 2024 guidance to an estimated $835-845 million. The company's main product, the MyRisk hereditary cancer panel, is expected to account for approximately 44% of the company's sales for 2023. Myriad Genetics also secured a new patent for its molecular residual disease assay technology.
Las Vegas Sands Corp's second-quarter results did not meet expectations due to disruptions from renovations in Macau and Singapore. Despite this, Macquarie maintained its Outperform rating on the company, citing long-term benefits from the renovations. Stifel also maintained a Buy rating for Las Vegas Sands Corp despite concerns about the company's operations in Macau.
Lastly, Mizuho Securities increased the price target for Las Vegas Sands Corp to $52, maintaining an "Outperform" rating on the stock. The company also reported a 24% increase in total gaming revenues in its Macau operations and is exploring new development opportunities in markets such as New York, Texas, and Thailand.
InvestingPro Insights
Recent data from InvestingPro adds depth to CFRA's analysis of Las Vegas Sands (NYSE:LVS). The company's market capitalization stands at $37.96 billion, with a P/E ratio of 24.19, reflecting the market's optimism about its future earnings potential. This aligns with CFRA's observation of the stock's recent surge and current valuation.
InvestingPro data shows impressive revenue growth, with a 68.48% increase in the last twelve months as of Q2 2024. This robust growth supports the company's strong position in its key markets of Macao and Singapore. Additionally, Las Vegas Sands boasts a high gross profit margin of 76.91%, underscoring its operational efficiency.
InvestingPro Tips highlight that Las Vegas Sands operates with a moderate level of debt and has liquid assets exceeding short-term obligations, which could provide some financial flexibility in case of market volatility. However, the stock's RSI suggests it may be in overbought territory, aligning with CFRA's cautious stance following the recent price surge.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Las Vegas Sands, providing a deeper understanding of the company's financial health and market position.
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