Casino Stock Scores Surprising Lift After Earnings

Options bulls are swarming to LVS in response

Digital Content Manager
Apr 23, 2020 at 12:18 PM
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Casino concern Las Vegas Sands Corp. (NYSE:LVS) is in the spotlight this morning after posting first-quarter losses of three cents per share, and $1.78 billion in revenue, missing analysts' estimates. Despite the miss, the stock is up 10.9% at $41.03, bolstered by the firm's prediction of a quick recovery in Macau, Singapore and China. A company executive said during a post-earnings call that "anecdotally that people are really frustrated and want to go back to gamble in the casinos," but added that the firm will continue social distancing measures as it reopens its Asian locations. 

The prediction has sparked plenty of attention from analysts. Instinet and Deutsche Bank lifted their price targets to $57 and $54, respectively, while Jefferies cut its price target to $61. J.P. Morgan Securities also slashed its price estimate, but upgraded the stock to "overweight" from "neutral." This puts the 12-month consensus price target at $64, which is a roughly 40% premium to current levels. Coming into today six covering the security considered it a "strong buy," while four said "hold."

Options players' ears are perking up too, with today's options volume running in the 99th percentile of its annual range. So far, 28,000 calls and 17,000 puts have exchanged hands -- five times what's typically seen at this point. The most popular is the weekly 4/24 41-strike call. Second most popular is the 46-strike call in the same series, with positions being opened here. 

While bulls rule the roost today, puts have picked up in popularity in recent weeks. In fact, LVS sports a 50-day put/call volume ratio of 2.69 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than all but 4% of all other readings from the past year. 

The security today is butting up against its 40-day moving average, which has kept a lid on LVS' recent rebound attempts. On the other hand, the equity is set to close back atop its 10-day moving average once again, after a brief dip below the region earlier this week. For the month, LVS is up 7.3%, though it's still suffering a 33.5% year-to-date deficit. 

LVS Chart Apr 23


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