Las Vegas Sands Is An Ideal Play On Macau Mass Market, Says Morgan Stanley

Las Vegas Sands Corp (NYSE: LVS) stands to capture upside from momentum in the Macau market as it shifts from VIP to mass market gamblers, according to Morgan Stanley.

The Analyst

Thomas Allen of Morgan Stanley reiterated an Overweight on Las Vegas Sands Corp. with an $84 price target. Las Vegas Sands is a top pick at Morgan Stanley. 

The Thesis

Infrastructure support and a number of macro drivers should drive outperformance in the Macau gaming market in 2018, Allen said in a Thursday note. 

Multiple mass tailwinds are being projected by Chinese economists, including increased outbound travel, higher spending and strengthening lower-tier city demographics, the analyst said. 

“We see unprecedented infrastructure support coming in the form of the Hong Kong-Zhuhai-Macau bridge, which should support mass by accelerating already strong visitation growth." 

Among the companies best positioned to benefit is Las Vegas Sands, which has historically outperformed in sync with mass market gaming, Allen said. 

“LVS has historically had a strong beta to mass outperformance, and we see it as best-positioned now given its footprint in a surprisingly tight supply market.”

The Macau market has record occupancy and a record low of unsold rooms versus overnight visitors, "suggesting rooms are an increasingly precious commodity," the analyst said. 

Price Action

At the time of publication, shares of LVS were trading up 0.2 percent at $74.58.

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