Wednesday, November 12, 2008

Las Vegas Sands (NYSE:LVS): LVS raises dilutive capital but eases balance sheet strain - Goldman Sachs

Goldman Sachs is out positive on Las Vegas Sands (NYSE:LVS) after the co announced an additional capital raise of $2.1bn.

Firm is maintaining their Buy rating on the shares but acknowledge that it will take time for full value to be realized and in the near term exogenous factors (visa restrictions loosened in Macau/broader global macro travel environment) and non core factors (condo sales in Macau) will drive operating results and share performance. The reason they are maintaining their constructive view is that at this point much of the bad news is in the stock and there is significant “option” value if trends recover and future growth opportunities (additional development in Macau) rematerialize.

Goldman is lowering their 12-month price target (based on sum-of-the-parts) to $9.50 from $25 based on lower estimates and to take into account the dilution from the capital raise.

Notablecalls: I suspect the stock is ready for a bounce here. It broke the $5.50 pricing yesterday in a hurry but given the fact they have avoided insolvency at least for the time being, big money operators will be looking to shake out the shorts.

PS: Note Jefferies is also out in defense of LVS saying they still believe in the co. LVS. The capital raise keeps LVS solvent in the near-term, and the long-term value is substantial with company forecasted 3.0x leverage in '12 (EBITDA $3.5bb). Firm's new target comes to $19 vs. $44, to reflect the dilution from yesterday's securities issuance and significant model revisions.

No comments: