Sterne Agee cuts LVS price target after weak results

Sterne Agee has cut its price target on Las Vegas Sands after the company posted weaker-than-expected Q1 results.

Analyst David Bain said Macau margins in the quarter were “worse than feared.” The firm is retaining its buy rating on the stock, but the price target moves down to $60 from $63.

Several new negatives emerged from the company’s results and management commentary on a subsequent earnings call, which aside from the weaker margins, also included softer hotel occupancy, the company’s high-fixed cost base given its focus on non-gaming amenities which are difficult to scale down and a later-than-expected opening of the company Parisian resort.

LVS now expects the new Cotai property to come on line in late 2016, two quarters later than Sterne Agee had anticipated. However, executives said on the call that it expects a request to the government for more labor to complete the project to be favorably received and that may bring forward the opening date.

Union Gaming also noted that margin pressure had been worse than anticipated, but said the worse may now be behind it, with the company focused on cost cutting.