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Gaming Guru

Arnold M. Knightly
 

Las Vegas Sands sees stock jump

2 July 2010

LAS VEGAS, Nevada -- Las Vegas Sands Corp. investors were the big winners in June, with the company's stock value climbing 11.12 percent for the month, a report issued by financial firm Applied Analysis shows.

Investor interest in the company was driven by the opening of the $5.7 billion Marina Bay Sands in Singapore in the second quarter, the firm said.

"The new project likely contributed to a reported 30.3 percent rise in visitors to the region during May," Applied Analysis partner Brian Gordon told investors. "(Las Vegas Sands) management remains bullish on the Singapore market and expected profitability."

Wynn Resorts Ltd. was the only other Nevada-based casino operator to post a month-to-month increase in value. But Wynn Resorts, which competes against Las Vegas Sands on the Strip and in Macau, saw its stock increase less than 1 percent.

The growth of the two companies helped increase the financial firm's monthly gaming index by 1.5 points to close the month at 334.36.

Applied Analysis charts the average daily stock price of seven casino operators and three slot makers.

With no significant financial data released in June by gaming operators, investor expectations remained weak for regional operators and manufacturers, Gordon said.

"Concerns about the national economic recovery persisted and challenges in the broader equity market continued," Gordon told investors. "The majority of gaming companies reliant upon discretionary spending remained off from where they started the month."

The largest drops were seen by Boyd Gaming Corp., down 17.21 percent, and Pinnacle Entertainment, which fell 14.2 percent.

Gordon said regional operators were hit harder as "broader economic conditions continue to remain somewhat soft in the markets in which they compete."

Gordon's analysis is supported by gaming analysts at Goldman Sachs. The bank's research division lowered its 12-month price targets for Boyd, Pinnacle, Ameristar Casinos and Penn National Gaming because of various economic and supply concerns in regional markets.

"We are lowering our 12-month price targets ... as we remain concerned about the slow pace of recovery in the near-term and long-term pressures from supply," Goldman Sachs gaming analyst Steven Kent told investors.

Goldman Sachs also lowered price targets for Bally Technology and International Game Technology due to weakness in regional revenues.

"We believe most slot managers' purse strings will remain tied," Kent told investors. "Especially with no new technology inducing replacement demand."

Both manufacturers saw their average daily stock value drop by double digits.

The next 30 to 45 days will reveal more about market trends in the casino industry, "including locals-oriented and destination-based gaming sectors," Gordon said.