Morgan Stanley Raises Estimates, PT on Wynn Resorts on Impressive Macau 4Q Results

In a report published Monday, Morgan Stanley analyst Thomas Allen commented on the gaining momentum in the Macau sector of Wynn Resorts, Limited (NASDAQ: WYNN). The analyst raised Macau property and 2014 estimated property EBITDA and increased the shares price target from $212.00 to $227.00.On January 30, Wynn Resorts reported better than expected results in Macau and in-line results in Vegas. Morgan Stanley increased 2014 estimated EBITDA from $1.96 billion to $2.01 billion versus consensus of $1.88 billion. The analyst noted that this modest increase reflects the stronger execution, which is already priced in.Allen was impressed by Macau's fourth quarter results and management's comments. he analyst raised Macau property EBITDA by approximately 3.5% from $1.47 billion to $1.52 billion. Morgan Stanley reported a substantial increase in 2014 rolling chip win growth from 8.0% to 18.4%. Allen expects momentum to continue this year with overall mass win to grow 18%.Morgan Stanley left Vegas EBITDA estimates unchanged due to mixed results in the fourth quarter. The analyst further commented on Wynn's plan for an early 2016 opening for Wynn Palace in Cotai. Allen included a $63.00 per share in his price target. He noted, “We assume that Wynn Palace is allocated 300 tables (3% annual table cap increase results in 1,800 tables available for six new Cotai properties). Our assumptions imply that the property will generate win/table/day well in excess of current levels (though current compounding rate of growth justifies this) and Wynn's Peninsula property in 2017 (given the shift in Macau to Cotai, we believe this makes sense). However, in aggregate, we assume Wynn Cotai generates lower EBITDA than the Peninsula property in 2017, despite having more hotel rooms and being the “must-see” property in Asia, which may be conservative.”Thomas Allen further examined Bull and Bear cases in his analysis of Wynn Resorts. The published price target of $227.00 is the Base case, assuming that Macau generates $1.52 billion of EBITDA in 2014, Las Vegas generates $485 million of EBITDA, and Wynn Cotai is worth $63.00 per share. The Bear case places a $167.00 price target on shares and adopts that Macau generates $1.42 billion of EBITDA in 2014, Las Vegas generates $444 million of EBITDA, and Wynn Cotai is worth $32.00 per share. The Bull case places a $269.00 price target on shares and assumes that Macau generates $1.62 billion of EBITDA in 2014, Las Vegas generates $533 million of EBITDA, and Wynn Cotai is worth $84.00 per share. Shares of Wynn Resorts closed at $217.42 on Friday.