JPMorgan upgraded this casino stock to ‘overweight’

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Jan 11, 2022
  • JPMorgan upgraded Las Vegas Corp to "overweight" with a PT of $48 a share.
  • Analyst Joseph Greff says Macau-related risks are already priced into the stock.
  • He expects Macau to renew all six casino licenses for five to ten years.

Shares of Las Vegas Sands Corp (NYSE: LVS) jumped close to 8.0% on Tuesday after the casino company found a spot on JPMorgan’s “Analyst Focus List” for 2022.

Las Vegas Sands could climb to $48 a share

JPMorgan’s Joseph Greff lifted his rating on Las Vegas Sands to “overweight” on Tuesday with a price target of $48 a share that represents another 25% upside from here. Previously, he rated it at “neutral” and had a PT of $36 on the stock.

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LVS took a massive hit in the back half of 2021 as China moved to tighten regulations on gambling in Macau. With shares down about 23% since early July, however, Greff says the Macau-related negativity is now priced into the stock. He wrote:

We note that the current level of investor apathy toward the Macau sector is the worst of any subsector within our coverage universe in our 22 plus years of covering gaming and lodging. We think the risk-reward is favourable in LVS after massive underperformance in 2021.

Greff is optimistic about license renewal

According to the JPMorgan analyst, Macau might refuse to issue new licenses, but the existing six will be renewed for five to ten years.

His estimate for gross gaming revenue from Macau stands at about 35% of pre-pandemic levels for now. Greff, however, expects that to improve once travel mobility picks up, likely in February after Beijing Winter Olympics.

A day earlier, Shaun Kelley of the Bank of America downgraded LVS to “underperform” and slashed his price target to $46. Unlike Greff, he continues to see Macau as a threat for the U.S. casino and resort company.   

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