Las Vegas Sands Stock So Bad, It May Actually Be Good, Says Strategist

Down 33 percent year-to-date, Las Vegas Sands (NYSE:LVS) stock isn’t just one of the worst-performing gaming equities.

Residing more than 40 percent below its 52-week high, it’s the only member of the S&P 500 with a 2021 loss of at least 30 percent and one of just six with year-to-date declines of 20 percent or more. Despite those ominous statistics, at least one market strategist believes the Londoner Macau operator can bounce back.

We’re looking for a little Lady Luck here, and taking a look at Las Vegas Sands. I mean, it might be so bad it could be actually good,” said Craig Johnson, chief market technician at Piper Sandler, in a recent interview with CNBC.

Johnson’s call on LVS stock comes as the shares closed just under $40 on Aug. 13. That’s above the worst levels seen this month. But the gaming equity is still residing around the lowest levels seen since the onset of the coronavirus pandemic last year, which hamstrung its Macau and Singapore operations.

Bold Call on LVS Stock

For investors, Sands has the makings of a contrarian play. While it’s still the largest domestic gaming by market capitalization, it has no US operations following the sale of the Venetian, Palazzo and Sands Convention Center on the Las Vegas Strip earlier this year.

That makes the operator vulnerable to the still-slow recovery in Macau and Singapore — the company’s two biggest markets.     That lethargy explains why some analysts turned cautious on the stock following downbeat second-quarter results.

“This is a stock that’s already taken a tremendous amount of pain. Yes, 80%+ of the revenues come from Singapore and Macau, so there are clearly challenges over there with further lockdowns related to Covid. But at some point in time, Covid will pass and we will start to see these gambling centers start to open up again,” said Johnson.

How Sands Can Right the Ship

Aside from rebounds in Macau and Singapore, Sands does have some other levers to pull to restore investor confidence. Those include finding new US markets, though wagers on New York and Texas have yet to pay off.

Additionally, the operator could finally push into online gaming and sports betting — two fast-growing segments it’s largely absent from. Last month, Sands created a digital gaming investment arm. But it’s yet to announce any transactions on that front, while dealmaking in the space is running at a brisk pace in recent weeks.

With one of the stronger balance sheets in the industry, Las Vegas Sands could also restore its dividend or repurchase shares to signal to investors management is confident in the stock.