For Immediate Release
Chicago, IL – December 22, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Las Vegas Sands (LVS), Wynn Resorts (WYNN), MGM Mirage (MGM), Gentiva Health Services Inc. (GTIV) and Amedisys Inc. (AMED).
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Here are highlights from Monday’s Analyst Blog:
Sands’ Casino Projects on Track
Las Vegas Sands’ (LVS) expansion projects are right on track. Sands’ Chief Executive Officer, Sheldon Adelson, expects to complete its Macau casino expansion projects within a period of 5 years. Its Singapore casino resort project should open by the end of March 2010.
The $5.5 billion Singapore casino project was initially scheduled to open by the fourth quarter of 2009. However, due to the lack of sand (for concrete) and workers, the project was rescheduled for a March opening. The cost of this project exceeded the initial estimate of around $3.2 billion. Adelson, however, mentioned that if the Singapore project gets delayed, it would only be for a couple weeks — not months.
Sands’ plan is to construct 5 properties on Macau’s Cotai strip. Of the 5 projects, two are half-constructed. The company was compelled to halt its expansion projects in Macau last year due to financial constraints. However, the company raised $2.5 billion by listing publicly its Macau unit, Sands China, last month.
Adelson said that the projects would be completed within 5 years, depending on the pace of approvals obtained by the company from the government. Phase one of the two half-completed projects is expected to open by June 2011. The company will infuse around $500 million more in the project, sourcing it from funds raised from the Sands China initial public offering.
After the completion of the projects, the Cotai strip will have over 20,000 hotel rooms, meetings and convention space of over 1.6 million square feet, with retail malls spreading over 2 million square feet.
Sands, whose competitors include Wynn Resorts (WYNN) and MGM Mirage (MGM), is investing billions for expansion in Asia and especially in Macau. We believe that going forward, this robust development pipeline positions the company well in Asia’s casino market.
Gentiva Downgraded to Neutral
We are downgrading Gentiva Health Services Inc. (GTIV) to Neutral because of concerns related to the intense competition faced by the company’s products, the vulnerability of Gentiva to reimbursement risk and the inherent risks associated with the company’s growth-by-acquisition strategy.
Gentiva, founded in 1999 and headquartered in Atlanta, Georgia, provides home health services in the United States. It serves nearly 500,000 patients annually in more than 380 locations across 39 states. Gentiva provides various services to patients, including skilled nursing; physical, occupational, speech and neuro-rehabilitation therapy services; cardiac and pulmonary care; disease and pain management; respiratory services and home medical equipment (HME); infusion therapy and hospice services.
Even though we are pleased with the company’s wide range of products and broad customer base, the highly competitive industry in which the company operates is a concern. It competes with players like American Homepatient Inc., Amedisys Inc. (AMED) and Apria Healthcare Group Inc.
The company is highly vulnerable to reimbursement risk given that Medicare is the largest single purchaser of services. In fiscal 2008, approximately 66% of Gentiva’s total net revenues were generated from Medicare, Medicaid and local government programs.
Gentiva has successfully grown through acquisitions. During the past few years, the company has completed multiple acquisitions, whose aggregate annualized revenues were in excess of $360 million. However, the growth-by-acquisition strategy adopted by the company has inherent risks.
Our price target of $28 is based on 13.3x our 2009 earnings estimate of $2.11.
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