Las Vegas Sands ‘High Dispersion’ Favorite at Goldman Sachs

Posted on: February 17, 2025, 04:00h. 

Last updated on: February 17, 2025, 10:13h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Sands stock could remain volatile, but it offers opportunity
  • Some analysts view the name as catalyst-rich and undervalued

Amid concerns about the state of the US/China trade relationship and the strength of the Macau comeback, these are volatile times for Las Vegas Sands (NYSE: LVS) as proven by a year-to-date decline of 15.56%. Even with those struggles, the stock has its supporters.

Sands
Visitors outside Parisian Macau. Goldman Sachs says operator Las Vegas Sands is a high-dispersion stock with out-performance potential. (Image: Anthony Kwan/Bloomberg)

In a recent report, Goldman Sachs said investors looking to potentially beat the broader market ought to consider high-dispersion stocks in the communication services, consumer discretionary, and technology sectors. Consumer cyclical is where gaming stocks such as Sands reside. Dispersion is a measure of statistical outcomes and when it’s high, it implies the various potential outcomes are widely spread out.

S&P 500 annual return dispersion in 2024 rose to 70 percentage points, the highest level outside of recessions since 2007,” notes Goldman Strategist David Kostin. “High return dispersion reflects a favorable stock-picking environment.”

Sands’ dispersion score is 6.1, or more than triple the S&P 500 median of 2.0, according to Goldman Sachs. The Venetian Macau operator is the only gaming name on the bank’s list of attractive high-dispersion stocks.

Policy Uncertainty Weighing on Sands Stock

One of the primary headwinds facing Sands stock is how President Trump will treat China — the largest feeder market to Macau where the company runs five casino hotels. The president has signaled he’s willing to employ trade tariffs against China and the latter has indicated it will respond in kind.

“Typically, higher levels of economic policy uncertainty coincide with higher levels of return dispersion as investors discern the winners and losers of proposed economic policy,” adds Kostin.

This is a movie Sands investors have previously viewed. During his first term, Trump lobbed harsh rhetoric at China, prompting then LVS Chairman and CEO Sheldon Adelson to warn the president to tone it down or risk losing reelection in 2020. On multiple occasions in August 2019, Adelson reportedly reached out to Trump, urging him to relax his tone on China.

Trump ultimately lost his 2020 reelection bid. Adelson’s widow, Dr. Miriam Adelson, remained a major Trump supporter and was one of the biggest financial backers of his successful 2024 presidential campaign. She’s also the largest individual shareholder in the gaming company.

High-Dispersion Stocks Not for Faint of Heart

Goldman’s Kostin points out that high-dispersion stocks “are as likely to generate large alpha through underperformance as through outperformance.” The implication is that while Sands offers investors alpha-generating potential, it could also be volatile on its way to lagging the broader market.

That said, Las Vegas Sands has its supporters with some believing the shares offer significant upside potential.

Bottom line is we see a clear path to $60+/share in the near term as investors grow more comfortable with the Macau/Singapore landscape,” wrote Stifel analyst Steven Wiecyznski in a recent note. “As we look across our coverage, Macau-centric names should be a group that outperforms this year given the fact demand patterns should accelerate which could translate into positive estimate revisions.”

Although the analyst lowered his price target on Sands to $64 from $66, the new price objective substantial upside from the stock’s February 14 close at $43.37.