On Thursday, Deutsche Bank (ETR:DBKGn) adjusted its outlook on Las Vegas Sands Corp. (NYSE:LVS) shares, cutting the price target to $62 from $66, while reaffirming a Buy rating for the company's stock.
The revision follows Las Vegas Sands' first-quarter earnings for 2024, which showed property EBITDA figures falling short of expectations. Despite the shortfall, the bank maintains a positive stance on the stock's future.
Las Vegas Sands reported its Q1 2024 earnings after the market closed, revealing property EBITDA that, even when adjusted for certain financial headwinds, did not meet the forecasts set by Deutsche Bank or the broader market consensus.
Specifically, the Macau property's EBITDA was $636 million, which was $72 million below Deutsche Bank's estimate and $67 million short of the consensus. Conversely, the Marina Bay Sands (MBS) property outperformed expectations on a hold-adjusted basis.
The bank noted that the key points of interest for investors in Las Vegas Sands' Q1 results were largely disappointing. This was the case even though market expectations prior to the release were already below consensus.
As a result, Deutsche Bank anticipates revisions to the consensus estimates to trend lower, aligning with their own reduced projections. The bank also expects the company's shares to face some short-term challenges until the company gains more stable ground.
However, Deutsche Bank highlighted several factors that could limit the downside risks and support the stock's potential for growth. These include the disruptions in Macau, such as those at the Londoner and Cotai Arena, and Las Vegas Sands' strategy of avoiding promotional activities in Macau, which has led to a reduced market share but could be seen as a positive in the long term.
Additionally, the firm pointed to the strong performance at MBS and the attractive valuation of Las Vegas Sands when considering the growth markets the company is involved in. These elements contribute to the bank's continued Buy rating on the stock.
InvestingPro Insights
With Las Vegas Sands Corp. (NYSE:LVS) navigating through a challenging quarter, a closer look at some key metrics and insights from InvestingPro could offer investors a more nuanced perspective. The company boasts a robust gross profit margin of 77.13% for the last twelve months as of Q1 2024, indicating efficient management and a strong pricing strategy. Additionally, analysts predict a profitable year ahead for Las Vegas Sands, a sentiment that is backed by the company's performance over the past twelve months.
InvestingPro Tips suggest that while the company is trading at a high revenue valuation multiple and Price / Book multiple of 9.16, the impressive gross profit margins and the anticipated return to profitability could justify the premium. Moreover, with a significant revenue growth of 112.05% for the last twelve months as of Q1 2024, Las Vegas Sands is showing a promising trajectory that may appeal to growth-oriented investors.
For those interested in diving deeper, there are 4 additional InvestingPro Tips available, which can be accessed at https://www.investing.com/pro/LVS. To enhance your investment research, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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