The removal of uncertainty about gambling in Macao has created major upside for Las Vegas Sands , according to UBS. Analyst Robin Farley upgraded the casino stock to buy from neutral, saying in a note to clients Wednesday that the new gaming regulations in Macao should be a boon for incumbents. "We believe the new gaming law significantly lowers risk for LVS: Six concessions are preserved, and the 10-year term would make it less attractive for any new entrants to invest in building a new resort," Farley wrote. "The phasing out of satellite casinos will also reduce competition - we estimate that satellite casinos make up between 15-20% of total tables in Macau. And importantly, the law draft does not contain dividend payout restrictions." Shares rose 1.6% in premarket trading Wedneday. While Macao officials have not chosen who gets the licenses, Las Vegas Sands is in better shape than some of its competitors or potential newcomers, UBS said. "While the potential delay in the bid process could introduce uncertainty, LVS exceeds the other concession holders in non-gaming investments and has the largest non-gaming asset footprint," the note said. Las Vegas Sands has been one of the rare winners for investors in the opening weeks of 2022, thanks to a 14% jump on Friday after the new Macao rules became clear. S & P 500 casino and gaming stocks are up 2.1% so far in 2022, outperforming the index, which is down 1.84%. UBS hiked its price target on Las Vegas Sands to $53 per share from $44. That new target is roughly 23% above where the stock closed Tuesday. -CNBC's Michael Bloom contributed to this report.
A dealer handles gaming chips at a baccarat table inside the Venetian Macau resort and casino, operated by Sands China Ltd., a unit of Las Vegas Sands Corp., in Macau, China.
Billy H.C. Kwok | Bloomberg | Getty Images
The removal of uncertainty about gambling in Macao has created major upside for Las Vegas Sands, according to UBS.