Market Overview

Wynn, Macau Might Be Finding Support; Telsey Advisory Upgrades Stock

Wynn, Macau Might Be Finding Support; Telsey Advisory Upgrades Stock
  • After having declined more than 58 percent, year to date, shares of Wynn Resorts, Limited (NASDAQ: WYNN) rose 9 percent over the past 5 trading days.
  • David Katz of Telsey Advisory Group has upgraded the rating on the company from Underperform to Market Perform, while raising the price target from $54 to $68.
  • Although the stock remains fairly volatile, due to the limited visibility into Wynn Resorts’ operating environment, Katz believes that the Chinese government’s support for the Macau economy is a positive.

Although specifics of the Chinese Government Liaison’s support for the Macau economy have still not known, Katz believes that the prospects of Wynn Palace opening in Macau have improved, saying that the “upside in the shares could be dramatic.”

If one assumes that the decline in the mass market table is 50 percent higher at Wynn Palace in 2016, Katz expects the property to be able to generate EBITDA of $351 million in 2016, rather than the earlier estimate of $172 million.

On the other hand, if the mass market table rises even 5 percent, the EBITDA could come in at $725 million for 2016, according to the Telsey Advisory report.

On the other hand, Katz expects the VIP business to continue to decline, while explaining that the “result of these prospective changes to the model would also imply higher multiples on the stock based on the notion that the estimates are moving higher rather than lower.”

While prospects of government support are likely to limit downside to the stock, Katz believes that “buying the stock based on a generally vague news report is speculative.”

Latest Ratings for WYNN

Nov 2020Morgan StanleyMaintainsOverweight
Nov 2020Morgan StanleyMaintainsOverweight
Nov 2020Morgan StanleyUpgradesEqual-WeightOverweight

View More Analyst Ratings for WYNN
View the Latest Analyst Ratings


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