Las Vegas Sands' Macau bets seen lifting Q4 earnings - 27th January 2014

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Casinos Gaming Las Vegas Macau United States Business

Las Vegas Sands (LVS) had a winning year in 2013 as earnings and revenue growth soared amid the buildout of its casinos in Chinese gambling hotspot Macau, and the outlook is for results to stay strong.

The world's biggest casino company reports Wednesday, and consensus is for Sands to report a 56% Q4 earnings per share jump to 84 cents. In the first three periods of 2013, EPS growth accelerated from 1% to 48% to 78%.

Revenue is projected to rise 21% to $3.71 billion, in line with growth in recent quarters.

In a report Monday, Wells Fargo analyst Cameron McKnight said he is positive on Macau operators such as Sands, Hong Kong's Melco Crown Entertainment (MPEL), Wynn Resorts (WYNN) and MGM's China operations, "as the medium-term outlook appears strong."

He expects strong growth in mass market revenue as Macau's casinos, restaurants and entertainment sites attract more tourists from China and throughout Asia.

But JPMorgan Chase analysts last Wednesday downgraded MGM Resorts International (MGM) from buy to neutral and recommended investors generally trim holdings of casinos operating in Macau, such as Sands.

The analysts cited growth prospects already being included in stock valuations, costs related to expanding casino capacity in Macau, and possible moderation of growth in the world's top gaming destination.

Sands shares fell nearly 10% last week after the report came out.

In early 2012, the company's Sands China Ltd. subsidiary opened Sands Cotai Central, its fourth casino in Macau and third on the trendy Cotai peninsula. Sands continues to expand the $4 billion Sands Cotai and has laid plans for future casinos in Macau.

Meanwhile, Sands has dropped plans to build a $30 billion Las Vegas Strip-style complex in Madrid. The move is expected to free funds to build more casinos in Macau.

Shares of Sands, whose stock is on the IBD 50 list of top-rated stocks, was down 1% in Monday afternoon trading on the stock market today.