Deutsche Bank has reduced its outlook for Las Vegas Sands‘ (LVS) operations in Macau via Sands China, due to several macroeconomic factors.
To see a positive movement in LVS shares, Deutsche Bank identifies several key factors that must align: an acceleration in gross gaming revenue (GGR) performance in Macau, a stabilization and subsequent increase in LVS’s market share in Macau starting in the second quarter of 2025, a reduction in geopolitical tensions, and a shift in the macroeconomic sentiment surrounding China.
The bank believes that achieving these conditions, combined with a consensus outlook that appears realistic, could position LVS as a compelling investment opportunity moving into 2025.
Despite the potential, Deutsche Bank acknowledges the current landscape as challenging, particularly with the looming possibility of further negative revisions.
The bank has adjusted its forecasts for LVS’ performance in Macau, reducing its EBITDA estimates by 13 percent for the first quarter of 2025, 8 percent for the full year 2025, and 6 percent for 2026.
These adjustments stem from anticipated lower market growth and more restrained market share expansion.
‘While broader market influences have served as headwinds for shares, we believe the slowing GGR cadence in Macau has also played a role in the performance of the Macau operators,’ the report states. In the first quarter of 2025, GGR expanded by less than 1 percent, falling short of mid-single-digit growth expectations.
Deutsche Bank highlights that this modest growth is ‘disappointing’, particularly due to concerns about a likely negative year-on-year comparison in the higher-margin mass segment.
The bank anticipates that official mass and VIP splits from the DICJ will be released later this week.
‘In 1Q25, we believe LVS likely experienced modest quarter-over-quarter market share contraction, despite some incremental hotel rooms coming back online,’ the report continues. However, management has indicated that the completion of The Londoner in the second quarter of 2025 may mitigate some of these concerns.
For the first quarter of 2025, Deutsche Bank estimates LVS’s GGR will range between $1.5 billion and $1.6 billion, noting that the consensus Metrix for LVS GGR stands at $1.7 billion. Importantly, the bank points out that LVS has largely avoided aggressive promotional activities that have contributed to share losses among competitors.
