On Thursday, Stifel, a financial services firm, adjusted its outlook on Las Vegas Sands Corp (NYSE:LVS), reducing the company's price target to $55 from $65, while still advocating a Buy rating for the stock. The revision reflects concerns about the company's operations, particularly in Macau, which have been underperforming.
The analyst from Stifel noted that the Macau-centered businesses are currently struggling, with Las Vegas Sands not expected to see a significant turnaround until at least the fourth quarter of 2024. This is when the majority of the company's assets are anticipated to be fully operational again. In the meantime, Las Vegas Sands is likely to lose market share, which could be a challenging narrative to promote in the current environment of cautious investors.
Despite the downturn in Macau, the analyst emphasized that the Singapore operations are still a key component of the Las Vegas Sands portfolio. Although the adjusted second-quarter 2024 results for Singapore were described as "average at best," the value of the Singapore asset is believed to be in the mid-$30s per share, which supports the analyst's position on the stock's potential.
The report acknowledged that while buy-side expectations are low, there is still hesitance to invest in Las Vegas Sands shares. This hesitancy is attributed to the ongoing political and macroeconomic headwinds that may persist. Nevertheless, the analyst justified the recommendation to buy, citing the current low valuations and favorable risk/reward balance as reasons to remain positive on Las Vegas Sands shares.
In other recent news, Las Vegas Sands Corporation reported robust growth in its Macau operations, with a 24% increase in total gaming revenues. The company also highlighted its strong performance in Singapore, with EBITDA reaching $512 million for the quarter.
Despite facing challenges such as weaker visitor numbers in Singapore and disruptions at the Londoner property, Mizuho Securities increased the price target for Las Vegas Sands from $51 to $52, maintaining an "Outperform" rating on the stock. The company also repurchased $400 million of its stock and signaled plans for future increases in shareholder returns. Furthermore, Sands is exploring new development opportunities in markets such as New York, Texas, and Thailand.
It's worth noting that the company's earnings did not meet the projections set by Mizuho or the general consensus, particularly for its Marina Bay Sands and Macau operations. The company remains optimistic, predicting that gross gaming revenue in Macau will surpass $30 billion next year.
InvestingPro Insights
As investors consider the Stifel report on Las Vegas Sands Corp (NYSE:LVS), real-time data from InvestingPro provides additional context to the company's financial landscape. With a current market capitalization of $30.04 billion and an adjusted P/E ratio standing at 18.91, Las Vegas Sands shows signs of robust financial health. The impressive gross profit margin of 77.61% over the last twelve months as of Q1 2024, combined with a notable revenue growth of 39.58% in Q1 2024, reflects the company's strong operational efficiency and its ability to scale effectively despite market challenges.
InvestingPro Tips highlight that Las Vegas Sands has a high shareholder yield and analysts predict the company will be profitable this year, reinforcing the potential upside of the stock. However, investors should be aware that 7 analysts have revised their earnings expectations downwards for the upcoming period, indicating potential concerns about future performance. Additionally, the stock is trading near its 52-week low, which could represent a buying opportunity for those who believe in the company's long-term prospects.
For those seeking a deeper analysis, InvestingPro offers more tips on Las Vegas Sands. Using the coupon code PRONEWS24, investors can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, granting access to an extensive array of financial tools and insights to inform their investment decisions. There are 6 additional InvestingPro Tips available that can provide further guidance on whether LVS aligns with your investment strategy.
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