Morningstar has assigned a HOLD rating to Las Vegas Sands Corporation (LVS), with a fair value estimate set at $60 per share. The stock currently trades at $52.47, representing a slight undervaluation. Despite regulatory uncertainties in Macao and competition across Asia, Las Vegas Sands maintains a narrow economic moat and exemplary capital allocation. Morningstar’s outlook is buoyed by significant investment in its Macao and Singapore assets, targeting long-term growth. However, with a high uncertainty rating due to regulatory pressures, investors are advised to approach with caution.

Valuation and Earnings Overview

Stock Valuation: Las Vegas Sands’ current trading price of $52.47 reflects an 87% price-to-fair-value ratio based on Morningstar’s fair value estimate of $60. This discount is due in part to regulatory uncertainties and construction disruptions in Macao.

Revenue and EBITDA Trends: Revenue in 2024 is expected to recover to near pre-pandemic levels, led by steady Macao growth at 9% and a strong Singapore presence with 10% revenue growth projected. EBITDA margins for Singapore are expected to hit 49.5%, contributing to sustained profitability.

Key Investment Focus: Macao and Singapore

Strategic Expansion in Macao: In Macao, Las Vegas Sands is investing over $3 billion into enhancing the Londoner and Four Seasons properties to support its competitive position on the Cotai Strip. The goal is to capitalize on high demand in China and reinforce its market share, currently standing at 33.5% EBITDA among six concession holders.

Singapore Market Strength: In the tightly controlled Singapore market, Las Vegas Sands is one of two licensed operators. Renovations are underway to enhance Marina Bay Sands, and an $8 billion fourth tower development is expected to open by 2031, adding capacity in the thriving market and reinforcing its duopoly position through 2030.

Competitive Advantages and Market Risks

Narrow Economic Moat: Las Vegas Sands’ narrow moat stems from its limited supply licenses in Macao and Singapore. The company’s expertise in integrated resorts, with extensive nongaming offerings, has secured its leadership in these markets.

Regulatory Headwinds: The Chinese government’s regulation over labor, gaming tables, and visitation limits introduces risks to growth. Similarly, Singapore’s restrictive gambling policies may curb expansion, though Sands is well-positioned to absorb demand shifts in the region.

Growth and Profitability Outlook

Profit Margins and ROI: Las Vegas Sands is projected to see EBITDA margin expansion driven by high-margin mass play in Macao. Management’s commitment to reinvest in its properties is expected to deliver double-digit returns on investment over the next decade.

Fair Value Estimate Adjustment: Morningstar raised its fair value estimate to $60, factoring in the time value of money and steady growth expectations. With 2025 EBITDA multiples estimated at 10x, this valuation acknowledges Sands’ sustainable revenue and competitive positioning in Asia.