CICC cuts Las Vegas Sands target to $51.8 on Q2 EBITDA miss

CICC cut its Las Vegas Sands price target 23% to $51.80 after the casino operator's second-quarter EBITDA missed consensus by 13%.

"The quarter is not what we wanted to see, but we feel pretty good about where we're headed, given the growth in volumes across all segments," Patrick Dumont, Chairman and Chief Executive Officer, said.

Adjusted property EBITDA fell 16% year-over-year to $1.12 billion, below the $1.29 billion consensus estimate. Revenue declined 1% to $3.15 billion, also missing the $3.31 billion average analyst forecast. Earnings per share of 59 cents trailed the 76-cent consensus.

The miss was driven by an exceptionally low VIP rolling hold rate of 1.35% at Sands China and World Cup-related travel diversion in Singapore and Macau. At a normal hold rate, Sands China's EBITDA would have reached $517 million, the company said. LVS shares fell more than 5% in after-hours trading.

Marina Bay Sands in Singapore generated $689 million in adjusted EBITDA, down 10% from a year earlier, as the World Cup drew high-value customers away from the market. Mass gaming revenue at the property still rose 5% year-over-year.

In Macau, Sands China's net revenue slipped 0.8% to $1.78 billion, while net income dropped 50% to $107 million. Rolling chip volume surged 72%, and mass-market gross gaming revenue increased 8%, outpacing the broader market's 4% growth.

CICC maintained its Outperform rating on LVS, citing the underlying volume growth across segments. The 23% target reduction reflects valuation adjustments following the quarterly miss, the broker said. At the current price of $45.25, the new target implies about 14.5% upside.

The company's board authorized a $6 billion share repurchase program through July 2029. LVS bought back about 15 million shares for $787 million during the quarter at an average price of $52.37. Since restarting the program in late 2023, it has repurchased 124 million shares, or 16.3% of outstanding stock, for $6.03 billion.

The EBITDA miss and target cut add near-term pressure on LVS shares, which have already fallen 30% this year. Investors will watch for a recovery in VIP hold rates and the completion of Venetian Macao renovations by early 2028 as potential catalysts.

This article is for informational purposes only and does not constitute investment advice.