UBS is out downgrading Las Vegas Sands (NYSE:LVS) to Neutral from Buy saying that while they remain optimistic on the long-term outlook, they think clients should cash in their chips.
It's just a one-pager:
Remain Optimistic on LVS Outlook; Though Perhaps a Better Entry Point
While we believe there is still upside to our current 2013 Macau and Singapore market estimates of $34B and $13B, respectively, which have consistently been the Street high for most of the year, with the stock up 250% this year, with this strong performance, even though we remain positive on LVS’ outlook and potential to outperform our est., we think there may be more attractive entry points, so we are bringing our rating to a Neutral with a $52 price target.
Foresee Positive Catalysts, But Stock May Offer Better Entry Point
As mentioned above, while it is still quite likely that our market estimates for Macau and Singapore are too conservative - looking for just 14-15% growth after 50%+ growth this year - the stock is reflecting more of our positive view as consensus estimates have moved closer to our ests, with nearer-term upside heavily factored into the stock. With labor issues around Cotai sites 5&6 likely to be resolved shortly and the property on track for an H1’12 opening, we do not see a shortage of positive catalysts, but at current valuations believe many are reflected.
Estimates Unchanged, But Believe They Could Prove Conservative
We continue to believe LVS’ property EBITDA could exceed $4B as soon as 2013, up from $1.1B as recently as 2009.
Valuation: Price Target now $52 (was $44)
Target based on 9-11x LV 2012E EBITDA, 15-17x Macau 2011E EBITDA, 16- 18x Singapore 2011E EBITDA and PV of royalty stream from LVS’ Macau operations to the parent, PV of LVS’ share of Sites 5&6 and Four Seasons condo sales.
Notablecalls: Not much substance there, so this one is a pure sentiment call. Given how heavy the general tape was yesterday, I would not be surprised to see selling in LVS. The stock is up 15 pts (!) in past 2 weeks.
I would not be surprised to see the $50 level tested today.