KeyBanc Maintains Underweight Rating of Wynn Resorts (WYNN)

According to researcher Dennis Forst at KeyBanc is advising investors to remain cautious of Wynn Resorts Limited (NYSE: WYNN). “While we believe that Wynn will successfully ride out this economic cycle, the stubborn recession will likely play havoc with cash flows for several more quarters,” Forst reported.

WYNN shares were up 38% for the year. WYNN’s adjusted enterprise value is currently 13x KeyBanc’s 2010 adjusted EBITDA estimate, well above the gaming group average of 10.1x and in line with the peer group average. The combination of a full value on the shares, negative group psychology and potential profit taking leads Keybanc to maintain their underweight investment rating on WYNN, with a downside price target of $45. That target price represents an 11.0x multiple of their 2010 cash flow estimate-to-current enterprise value. Even at that level, WYNN would still be trading at a healthy valuation, albeit what Keybanc believes to be a better reflection of risk/reward in the gaming group today.

WYNN shares are up 3.5% today to bring stock prices to $65.83 per share. The stock has shown steady improvement since their close at $17.65 per share one year ago.