Citi raises Las Vegas Sands stock target on strong earnings

On Thursday, Citi maintained its Buy rating on shares of Las Vegas Sands Corp. (NYSE:LVS), while slightly increasing the price target from $74.00 to $75.00. The adjustment follows Las Vegas Sands' first-quarter earnings for 2024, which outperformed expectations due to robust gaming volumes and operational efficiency, particularly at the Marina Bay Sands (MBS) property.

Las Vegas Sands reported a luck-adjusted property EBITDA of $1,161 million for the first quarter, surpassing Citi's forecast by approximately 7%. This strong performance was noted despite ongoing renovations at the hotel, which had reduced the number of available rooms. The record-high EBITDA at MBS was achieved with around 770 suites out of 1,850 rooms in service.

Management at Las Vegas Sands anticipates that upon completion of the refurbishment program by the Chinese New Year on February 10, 2024, MBS will be capable of achieving a quarterly EBITDA of $600 million. This outlook is bolstered by the expectation that all suites will be back in service after the renovations.

In Macau, Citi analysts believe that the market has already accounted for the potential disruptions caused by the second phase of renovations at the Londoner property. As these developments were previously communicated by the company's management, the impact is considered to be well anticipated by investors.

Citi continues to favor Las Vegas Sands as its Global Top Pick in the gaming sector. The firm highlights the stock's valuation, which is currently trading at approximately 9.0 times the forecasted FY24 Enterprise Value to EBITDA (EV/EBITDA), significantly below its historical average of around 11.6 times. The increase in the price target reflects a 5-10% uplift in EBITDA forecasts for Marina Bay Sands.

Recent data from InvestingPro underscores the potential that Citi analysts see in Las Vegas Sands (NYSE:LVS). With a market cap of $37.74 billion and a robust gross profit margin of 77.13% over the last twelve months as of Q1 2024, the company's operational efficiency is evident. These figures align with the company's reported success in the first quarter, particularly at the Marina Bay Sands property.

Investors may also find the revenue growth of 39.58% in Q1 2024 noteworthy, as it demonstrates the company's ability to expand its financial top line amidst challenging market conditions. An InvestingPro Tip that could be particularly interesting is that analysts predict the company will be profitable this year, which is supported by the fact that the company has been profitable over the last twelve months.

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For those considering an investment in Las Vegas Sands, it's worth noting that the company is trading at a high revenue valuation multiple and a high Price / Book multiple of 9.16 as of the last twelve months. These metrics could suggest that the stock is priced at a premium, but the company's strong performance and optimistic outlook might justify this valuation for some investors. For more detailed analysis and additional InvestingPro Tips, there are 5 more tips available on the InvestingPro platform for Las Vegas Sands, which can be accessed with an additional 10% off a yearly or biyearly Pro and Pro+ subscription using the coupon code PRONEWS24.

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