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: Stop selling Las Vegas Sands stock as Macau, COVID risks fade, BofA says

Shares of Las Vegas Sands Corp. rose Thursday after BofA Securities backed away from its bearish call, as risks around its Macau exposure abate, and as COVID risks appear to be on “borrowed time.”

Analyst Shaun Kelley raised his rating on the casino operator to neutral, nine months after downgrading the stock to underperform. He kept his stock price target at $37.

The stock

fell 1.2% in midday trading, and has traded in a volatile intraday range of down as much as 4.5% and up as much as 2.1%. The stock has lost 1.0% since Kelley downgraded the stock on Jan. 12, while the S&P 500 index

has shed 22.1% over the same time.

Kelley said concessions for Macau gaming licenses are set to be renewed in December, with few surprises relative to exiting terms, which would be a “material positive” for casino operators there. In the company’s second quarter, revenue from Macau casinos totaled $374 million, or about 36% of total revenue.

Don’t miss: Las Vegas Sands and Wynn Resorts shares lead S&P 500 winners after Macau’s surprise new COVID-19 recovery plan.

In addition, although it’s hard to predict how China’s zero-COVID policy plays out, “multiple vaccine candidates, combined with lockdown unpopularity and a rapidly slowing economy make an eventual policy pivot increasingly likely,” Kelley wrote in a note to clients.

Investors shouldn’t be too concerned about concerns over how high inflation, and the Federal Reserve’s response, will affect the U.S. market and economy, Kelley said. That’s because Las Vegas Sands’ stock has a low correlation with how the U.S. economy performers and with the trajectory of interest rates, and has “substantial positive” estimate revision potential should a reopening occur.

The stock has gained 8.6% over the past three months but had lost 4.2% year to date, while the S&P 500 has declined 4.3% the past three months and tumbled 23.6% this year.

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