Equity analysts have maintained their Buy rating for Las Vegas Sands, despite first-quarter Macau results coming in lower than expected. They also praised the operator’s results in Singapore and its decision to pull its bid for a casino license in New York.
Sands announced Wednesday that it’s pulling its bid to have a $6 billion casino at the Nassau Coliseum on Long Island and will offload its interests to a third party.
John DeCree, director of equity research for CBRE, highlighted a record performance at Marina Bay Sands in Singapore: $605 million of EBITDA and margins exceeding 50%. The consensus was $530 million of EBITDA, with the outperformance driven by an all-time record in mass revenue of $778 million and the rollout from its new suite products.
The company’s $1.75 billion capital-investment program is now substantially completed and the property features 775 suites, up from 150 in late 2022. The property achieved a near-record average daily room rates of $925, just missing the fourth-quarter’s record of $927. That indicates a strong demand for suite products, DeCree said.
The property held as expected in the quarter, but LVS revised its expectations for rolling hold-adjusted win percentage from 3.3% to 3.7% (primarily due to player preference/game mix), DeCree said. “We see plenty of additional runway for MBS, aided by its recent investments.”
As analysts suggested before first-quarter earnings were released, DeCree said Macau market growth is slowing, but he noted that The Londoner is back online. In Macau, LVS generated $535 million of EBITDA, mostly in line with a revised estimate of $531 million, but that was below the FactSet consensus estimate of $608 million. This was partially due to lower than expected hold, but results still would have missed when accounting for the $10 million EBITDA hold impact, DeCree said.
“The balance can be attributed to sluggish market growth, with market-wide gross gaming revenue up less than 1% year-over-year and elevated opex related to The Londoner,” DeCree said. “On a more positive note, the Londoner is now fully operational and poised to drive revenue and EBITDA growth, particularly during the May Golden Week. LVS should be able to recapture some market share as it ramps up over the next 12 months.”
DeCree pointed out that LVS remains optimistic about its relationship with Macau, emphasizing a 20-year partnership built on significant capital investments. Despite U.S.-China tensions, LVS anticipates continued support from Macau’s government.
DeCree maintained the Buy rating with a $45 price target.
“LVS remains our preferred way to play the Macau gaming space, supported by Marina Bay Sands,” DeCree said. “LVS has been overly penalized by recent market fluctuations and is now trading at a level that barely covers the intrinsic value of MBS alone, creating a compelling entry point.”
Jefferies analyst David Katz said the quarter was lower than their optimistic estimates in Macau on ramping up competition. Their expectation is that the near term could reflect economic pressure, which they’re reflecting in their updated forecast.
“Meanwhile, the strong outperformance of Marina Bay Sands is positive, which we believe offsets the mixed Macau results,” Katz said. “Finally, the redirection of capital from New York toward repurchases (of stock) is also positive for the shares. At 6.3X 2026E EBITDA, we reiterate our buy. We decreased our price target to $50 from $53.”
DS Kim, an analyst for J.P. Morgan, had the most negative take and said Sands’s first-quarter results were “undeniably weak across the board with lingering market share loss and poor margins.”
Kim said they can’t say this was unexpected, given the significant stock underperformance this year, being down 35%.
“Therefore, we believe the results are backward-looking and unlikely to significantly impact buy-side sentiment,” Kim said. “We think the expected Street earnings cuts (note we’re 9% below pre-print consensus EBITDA for fiscal year 2025 earnings) may even serve as a clearing event and in turn potentially allowing the stock’s valuation to normalize as business momentum hopefully rebounds gradually into the second half of 2025 and 2026 with the ramp-up of Londoner Grand. We feel it is too late to downgrade the stock at this point, and we stay overweight for medium-term investors, based on its valuation and dividend hike potential.”
Kim couldn’t find anything “really positive” from the print or earning’s call. Despite that, “Sands revenues, market shares, margins, and EBITDA were well in line with what we and the Street had expected into the print. I guess it’s better to have weak but in-line than an earnings miss.”
Sands’s gaming revenue fell 2% quarter over quarter and 6% year over year versus industry’s flattish momentum, and its market share edged down by 50 basis points to 22.4%, its lowest level since the border reopened two years ago, Kim said.
“This was particularly disappointing, as Sands opened Londoner Grand during the quarter and it had more/better rooms in the first quarter versus the fourth quarter,” Kim said. “Sands did gain shares on the VIP side, but this wasn’t enough to offset its mass share loss. By property, Londoner itself did grow mass/slot gaming revenue by +8% quarter-over-quarter but at the expense of other properties within Sands’ portfolio (the Venetian and Four Seasons). This suggests bigger-than-expected cannibalization from the Londoner Grand opening, which is not unprecedented for new property openings during an industry downturn.”
Kim said their 2025 fiscal year earnings EBITDA is 9% below pre-print consensus and he expects consensus will come down.
“That being said, this is unlikely to significantly impact buy-side sentiment, given a much lower bar of investor expectations, and we cautiously believe the expected Street earnings cuts may even serve as a clearing event,” Kim said. “This could potentially allow the stock’s valuation to normalize, as business momentum hopefully rebounds gradually into the second half of 2025 and 2026 with the ramp-up of Londoner Grand. Fingers crossed.”
Carlo Santarelli, Deutsche Bank analyst, cited LVS’s reporting upside to its forecast at Marina Bay Sands, though Macau came in lighter than expected on a hold-adjusted basis.
“The dichotomy between the two markets, Macau and Singapore, was very pronounced in the first quarter with Macau missing our property EBITDA estimate after a $10 million favorable hold adjustment by $6 million,” Santarelli said. “Our forecast was $63 million below the Consensus Metrix Consensus. In Singapore, property EBITDA of $605 million was $78 million ahead of our forecast and $81 million better than Consensus Metrix Consensus. In aggregate, while Macau gets all the attention, the larger EBITDA generator and the wholly owned entity in MBS delivered well beyond expectations.”
Santarelli said while New York has been removed from the potential growth pipeline, “We don’t think this is necessarily a true negative other than from an optics and growth perspective. Within the commentary, management mentioned the threat of legalized online gaming and noted that it was in the process of working with a third party who could address the online sphere to transact the Nassau Coliseum site and opportunity to bid.”
When it comes to competitive license bids over time, Santarelli said two things have always been true: Increased construction costs rarely or never generate incremental returns on capital and “more often than not, public entities will drop a bid prior to process completion, if they don’t believe their likelihood of success is high. We believe these points, as well as the current LVS valuation, and therefore the challenge of making the project accretive to the equity were likely more responsible for the decision than the online gaming risk. We believe it would be difficult for any public gaming operator at this stage to justify the return merits of the project.”
In order for the LVS shares to work, Santarelli said there needs to be some combination of an acceleration in Macau market gaming revenue performance; a stabilization and acceleration in LVS Macau market share in the second quarter of 2025 and beyond; a cooling geopolitical environment; and a change in sentiment around the macroeconomic picture in China.
“We believe these items, when coupled with a Consensus outlook that appears achievable (the current does not in our view), would set LVS up well to work as an inexpensive beat and raise story as we move through 2025. We believe the current Consensus, specifically for Macau for 2025, is elevated, and we believe investors will garner more comfort at the currently compelling valuation to enter shares with a more favorable / reasonable, Consensus backdrop. We suspect the first quarter performance is likely to drive a healthy negative revision in Macau.”
Santarelli said their estimated revisions are favorable, driven entirely by Marina Bay Sands. Their price target remains $59 and they reaffirm their Buy rating.
