Tim Seymour continues to like Las Vegas Sands stock: ‘valuation is still very cheap’

on Jun 13, 2023
  • Analysts at Jefferies downgraded two casino names last week from Buy to Hold.
  • Las Vegas Sands and Wynn Resorts were subject to the rating cut.
  • Las Vegas Sands investor Tim Seymour says the stock's valuation 'is still very cheap.'

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Analysts at Jefferies parted ways with their bullish stance on casino stocks last week and are sticking to the sidelines on both Las Vegas Sands Corp. (NYSE: LVS) and Wynn Resorts, Limited (NASDAQ: WYNN).

Jefferies analyst David Katz is moving to the sidelines in both names, recommending investors continue holding shares – but not adding to their position. While the analyst notes that upside potential is more limited, Las Vegas shareholder Tim Seymour is unconcerned.

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Seymour: ‘good to be patient’

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Seymour Asset Management founder and Chief Investment Officer Tim Seymour commented on the downgrade after Thursday’s closing bell. On CNBC’s “Fast Money” he said he has been a Las Vegas Sands shareholder for a year and this is a name where it is “good to be patient.”

He notes that the Macau recovery remains “early”, the company’s property in Singapore is “crushing it”. As such, the stock’s “valuation is still very cheap.”

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Are crypto casinos a new threat to traditional casinos?

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While not mentioned in the Jefferies report, the potential long-term headwind with owning casino stocks is that it faces growing competition from online rivals, both big and small. Online casinos, especially crypto casinos, continue to pop up worldwide. In many cases, casino operators tailor their products to local markets to gain market share with an emphasis on privacy and security.

For example, Norwegian players who want to protect their privacy can use Astropay payment methods in Norway to increase security. 

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Granted, Norway in particular is not a major driver of gambling tourism to Las Vegas and Macau. But the fact that online casino operators are able to quickly and effectively target markets of all shapes and sizes implies it is a matter of time before the online casino industry successfully penetrates a market that is vital for Vegas and Macau operators.

A new research paper published last week also highlighted this potential threat to traditional casinos. ResearchAndMarkets.com’s latest report titled “Online Gambling Market – Global Outlook & Forecast 2023-2028” notes that the global online gambling market is modeled to grow at a 12.56% compounded annual growth rate through 2028.

The report notes that digital and cryptocurrency acceptance as currency for play is one of the opportunities and trends driving growth in the segment.

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