LVS: ESTIMATES ARE TOO DAMN HIGH!

Takeaway: Adding LVS to the Hedgeye Best Ideas list on the short side

Jimmy McMillan would be cutting estimates.


 

CALL TO ACTION

We are adding LVS to the Best Ideas list on the short side.  Consensus estimates still need to come down for Q3, Q4 of 2014 and for 2015.  Hedgeye is currently 6%, 7%, and 9% below the Street, respectively.

 

THE SETUP

LVS was a top long idea on the Best Ideas list from 01/31/14 until we removed it on 03/10/14.  We made our Mass Decelerating call on June 13th and highlighted LVS as the most at risk to estimate reduction and stock pressure.  The condition of the Macau market has deteriorated faster than even we expected and while we’ve had lower than consensus estimates for 2H for a while, we feel compelled to lower estimates once again.  Here are our EBITDA estimates versus Consensus.

 

LVS: ESTIMATES ARE TOO DAMN HIGH! - q3

 

We still like the long term outlook for Macau and believe that LVS is very well positioned to capitalize on Macau and Asian growth.  However, with the fundamentals worsening over the near and intermediate term, Mass disappointing more on the margin, and lower estimates, LVS and the Macau stocks look like they should continue to move lower.  Strong Golden Week hotel bookings notwithstanding, October and Q4 offer few catalysts and we fear the difficult market will continue into 2015.


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