Sands Downgraded as Analyst Sees Good News Priced In
Las Vegas Sands (NYSE: LVS) slipped Tuesday after the stock was downgraded on the basis that much of the positive news out of Macau is priced into the shares.
Analyst Rating and Price Target Change
The gaming stock fell 3.99% on volume that was about 50% above the daily average after Morgan Stanley analyst Stephen Grambing cut his rating to “equal-weight” from “overweight” while paring his 12-month price target to $51 from $54. That implies upside of 13.3% from Tuesday’s close at $45. Grambing acknowledged Sands’ shares are discounted on the basis of enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA).
Performance and Speculation for 2025
While the stock lagged the S&P 500 last year, it posted modest upside, prompting some in the investment community to speculate Sands could be in for better things in 2025. That could prove accurate, but the stock has started 2025 in turbulent fashion, shedding 11.64% over the past week on its way to a 12.38% drop since the start of the year.
Sands Fundamentals Decent, but Scrutiny Warranted
Some of the bullishness ascribed to Sands and other Macau casino real money slots stocks centers around the point that in 2024, gross gaming revenue (GGR) grew in the Chinese territory, but remain well below the levels seen before the coronavirus pandemic.
Renovations and Growth Projections
Sands is positioned to take advantage of those trends with new room supply at the Londoner and Venetian coming online, but Grambling argues those factors are priced into the shares.
Renovation Disruptions and Consensus Estimates
From a fundamental perspective, 2024 ended lower than forecasts on the back of a slower ramp in the market and greater disruption from renovations (Londoner and Venetian arena). While renovation disruption should ultimately unwind, 2025/2026 consensus estimates appear to already embed that outcome with healthy overall growth, anticipating solid share gains.
Potential Impact of Chinese Monetary Stimulus
Upgrades at the Londoner are expected to be finished in the first half of this year, and while that could benefit Sands, the operator’s leverage to mass-market patrons could make the stock somewhat dependent on China unveiling more, wider-ranging monetary stimulus – something that’s not guaranteed to occur.
Cautious on Singapore, Too
Singapore, which is home to Marina Bay Sands, is the only other market in which LVS operates casino hotels, and Grambling sounded a cautious tone on that jurisdiction, too. He pointed out that visitation to the city-state by Chinese tourists – a vital demographic — is slowing at a time when Sands is planning major upgrades to its integrated resort there.
Potential $9 Billion Investment in Marina Bay Sands
It’s rumored that Sands could borrow up to $9 billion to add a fourth tower and other enhancements to its iconic Singapore property. Marina Bay Sands is one of the most valuable gaming brands in the world and the gaming venue is one of the most profitable of its kind.
Concerns Over Singapore Tourism and Investment Scrutiny
Those expenditures could medium-term scrutiny from analysts and investors if Singapore tourism dips.
