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Las Vegas Sands Corp. (NYSE: LVS) may miss expectations when it kicks off the first-quarter earnings season for Macau gaming stocks, an analyst said.
Deutsche Bank's Carlo Santarelli recently trimmed 4 percent from his target on Sands to $47 and sees the company's first-quarter adjusted earnings coming in 12 percent below the Wall Street consensus of $0.72 a share.
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Editor's note: Las Vegas Vegas reported EPS of $0.64 on $3 billion revenue.
Shares in the Macau gaming sector are likely to be volatile until the climate for gambling in the former Portuguese colony stabilizes, according to JP Morgan's Joseph Greff, who nonetheless rates Sands Overweight with a $60 target.
Related Link: Morgan Stanley Says Macau Worse Than Expected, Singapore And Vegas 'Roughly' In Line
Sands' results are followed next week by Wynn Resorts, Limited (NASDAQ: WYNN) and MGM Resorts International (NYSE: MGM), while Melco Crown Entertainment Ltd. (NASDAQ: MPEL)'s earnings release is unscheduled but expected in early May.
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Greff advised clients to acquire shares in the sector only on weakness, with prices for the group currently subject to a "tug of war" between dividend yields and the risk of further cuts to consensus views.
Greff cut his Sands first-quarter adjusted earnings estimate by 5 percent to $0.72 a share, while Estimize, a crowd-sourced earnings estimate platform, called for Sands EPS $0.76.
Along with continued sluggish traffic caused by a corruption crackdown on mainland China, Macau operators' profit margins are coming under pressure from higher labor costs.
Santarelli, who maintains a Hold rating on Sands, said its staffing costs per gambling table in Macau are up 15 percent from a year earlier.
Wynn's staffing costs are up 13 percent and MGM's are up 11 percent, according to Santarelli.
Wall Street analysts on average expect MGM to post $0.14 a share in first-quarter earnings April 28.
Santarelli's estimate MGM estimate is in line with the consensus; Greff calls MGM "our preferred way to play the Macau operators at this time."
Wynn is seen on average coming in at $1.35 a share on April 30; Santarelli said Wynn's earnings will be 12 percent below the consensus.
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.