Early last week, a district court judge dismissed pleas from Las Vegas Sands Corp. (NYSE: LVS, Stock Forum) to reject an employment case filed by a former manager, who claims he was fired for refusing to comply with what he says were illegal demands from Chief Executive Sheldon Adelson. In response, Argus cut its rating on the stock to “hold” from “buy,” noting that similar cases have taken around one to three years to conclude, and that a few of the higher-profile cases have resulted in hundreds of millions of dollars in fines and legal costs.
It’s no surprise, then, to discover that options traders have ramped up their bearish exposure to the equity lately. During the past couple of weeks on the International Securities Exchange (ISE), LVS has racked up a put/call volume ratio of 0.70 – in the 86th percentile of its annual range. In other words, speculators have bought to open LVS puts over calls at a much faster clip than usual lately.
Just last Friday, overall put volume on LVS accelerated to 1.31 times the norm, with roughly 51,000 contracts exchanged. Traders on the ISE bought to open 4,225 puts on LVS by the time the closing bell sounded, compared to just 946 calls.
From a technical perspective, it's not hard to see why the bears are piling on. LVS has shed nearly 16% year-to-date, woefully underperforming the broader equities market. The stock is also staring up at the round-number $40 level and its 32-week moving averages. Going forward, these former areas of support could switch roles to act as resistance.
Plus, there’s plenty of room for more analysts to follow Argus to the bears’ camp. According to Zacks, the equity maintains 14 “strong buys” and three “buy” endorsements, compared to seven “holds” and not a single “sell” recommendation. Furthermore, Thomson Reuters deems the average 12-month price target on the security at $58.83 – representing a steep premium of 39% to LVS’ closing price of $38.69 on Monday. A fresh wave of bearish brokerage attention could exacerbate the stock’s challenges on the charts.
Disclosure: Andrea Kramer has no financial interest in any of the equities or products mentioned in this column.