JPMorgan’s Joseph Greff believes the prior estimates for Las Vegas Sands Corp. LVS's Macau same-store revenue for 2Q16 could prove to be too aggressive.
Greff maintains a Neutral rating on the company, while lowering the price target from $52 to $47.
Estimates Lowered
The analyst mentioned that the “prior assumptions of sequentially flat mass table gaming revenue growth as aggressive given reported headline/aggregate Macau GGR for the 2Q16.”
Greff now expects a 5 percent sequential decline in mass and slot gaming revenue, while leaving the VIP gross gaming revenue estimate unchanged.
The 2Q16 property level EBITDA estimate has been revised from $502 million to $481 million, representing a 14 percent year-on-year and 6 percent quarter-on-quarter decline.
The 3Q16 and 4Q16 Macau property level EBITDA estimates have also been lowered to reflect lower same-store mass volumes, partially offset by previously modeled opex shifting to Parisian and EBITDA contribution from Parisian.
The 2017 all-in Macau property level EBITDA estimate has also been lowered, while the Las Vegas and Singapore estimates have been left unchanged.
Why Neutral?
Greff prefers to remain on the sidelines, “given a loss of ‘less bad’ operating momentum/trends and pending capacity additions to the market over the next several quarters, which make for earnings predictions to be incredibly tough.”
However, the analyst also pointed out that Las Vegas Sands had the potential to monetize part of its Singapore retail mall in 2017.
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