Stifel: Wynn's Quarter-To-Date Results 'Impressive,' But 'Considerable' Overhang Tied To Former CEO Remains

Wynn Resorts, Limited WYNN offered an update Wednesday on its financial performance and dividend. While the update was "impressive," the company's ongoing regulatory and legal woes create an overhang, making a bullish stance inappropriate, according to Stifel. 

The Analyst

Stifel's Steven Wieczynski maintains a Hold rating on Wynn's stock with an unchanged $186 price target.

The Thesis

Wynn's stock should react to the upside, as multiple financial metrics for the two-month period covered during the presentation were encouraging, Wieczynski said in a Wednesday note. 

The metrics include the following, the analyst said: 

• EBITDA rose between 27 to 34 percent.
• Macau EBITDA rose 51 percent at the midpoint.
• Mass hold at Wynn Palace rose 430 basis points.
• Las Vegas EBITDA fell 11 percent at the midpoint, but revenue per available room rose 11 percent.

The reported metrics came in ahead of Wall Street's expectations overall and signal that the "unexpected change" in executive leadership hasn't slowed down any momentum that has been building up over the past few quarters, the analyst said.

"To be honest, we are not all [that] surprised by the performance at the company's Macau assets, as the underlying market indicators remain strong, particularly in the segments that resonate most prominently with WYNN's core customer base," Wieczynski said. 

"Furthermore, given the cultural differences that exists, we did not expect the allegations against Mr. Wynn to materially impact the core Chinese customer's intent to visit." 

The sexual misconduct allegations against former CEO Steve Wynn represent a "considerable regulatory/legal overhang on the story at this point," and the full magnitude of the scandal's impact on valuation is "incredibly difficult to accurately measure," the analyst said. 

Price Action

Wynn Resorts shares were up nearly 7 percent at $180.14 at the time of publication Thursday afternoon. 

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