Macau Bet Pays Off Big Time For Las Vegas Sands

Thomas Allen of Morgan Stanley maintains an Equal-Weight rating on Las Vegas Sands' stock following the earnings report and increased his price target to $58 from a previous $54, mostly due to Macau's hot performance.

Macau In Focus

Allen noted that Las Vegas Sands' Macau unit reported an EBITDA of $629 million, which exceeded his estimates of $541 million and the consensus estimate of $530 million.

The company's Venetian property was the major driver of outperformance and reported an EBITDA of $315 million, which is above the analyst's estimate of $265 million even though new supply entered the market.

Allen added that Las Vegas Sands' operations at its brand-new Parisian property are off to a solid start and posted an EBITDA of $19.2 million through its first 18 days of operations, which also exceeded the analyst's expectations of $16.7 million.

Estimate Changes

Allen suggested that the Macau gaming market is showing signs of improvement, which prompted the analyst to revise his estimates higher. Specifically, Allen is now modeling his 2017 Macau EBITDA estimates by 6 percent to $2.49 billion from a prior $2.35 billion.

Allen continued that he may have "underappreciated the critical mass benefit / overestimated the cannibalization of the Parisian and other new proprieties" to Las Vegas Sands' portfolio.

At last check, Las Vegas Sands stock was up 4.53 percent at $59.31.