Bank Of America Cuts Las Vegas Sands Estimates, Price Objective Following Q2 Results

In a note dated July 17, Bank of America analyst Shaun Kelley lowered his price objective for Las Vegas Sands LVS from $98 to $95, but maintained a Buy rating on the stock.

Kelley said Macau is the culprit for the company's miss in the second quarter. More specifically, he pointed to the segment's lower-than-expected margins as the driver behind the miss (actual: 34 percent, estimated: 35.7 percent).

Looking at the reasons behind the sub par margins, Kelley noted that the company said it was due to 1) $29 million in bonus expense, of which Kelley believes $14 million is non-recurring, 2) a low hold in premium Mass, and 3) negative mix from grind Mass to premium Mass. Kelley expects the last issue to convert back as the company moves into the second half of 2014, but says the other issues will continue. Based on this, he has lowered his 2014 and 2015 Macau estimates by 4.4 percent

His lowered expectations for Macao have resulted in his 2014 and 2015 EPS estimates dropping from $3.80 and $4.41 to $3.63 and $4.27, respectively.

Following the company's poor results in the second quarter and the Bank of America note, shares of Las Vegas Sands are down ~2.45 percent in Thursday's pre-market session.