Wynn Targets Slashed At This Research Firm On 'Challenging' Macau

• The share price of Wynn Resorts, Limited WYNN has declined 52.26 percent year-to-date, hitting a low of $51.71 on October 1.
• Credit Suisse’s Joel Simkins has maintained a Neutral rating on the company, while lowering the price target from $105 to $76.
• Simkins expects the company’s meaningful exposure to Macau and VIP leverage to prove challenging for both its Macau and Las Vegas businesses in the near term.

According to the Credit Suisse report, Wynn Resorts reported its 3Q15 adjusted property EBITDA significantly below the consensus, while mass gaming revenue was mostly flat quarter-on-quarter, driven by continuing material VIP declines in Macau.

“We think near-term expectations have been appropriately reset, however new supply, junket liquidity concerns, and the viability of the VIP business create downside risk in our opinion,” Simkins stated.

Wynn Palace is slated to open on March 25, 2016, and Simkins believes that this location could help the company balance its cost structure “to support a change in market dynamics.” However, Simkins also believes that this might not be enough to mitigate weakness in the topline.

“Until there is a clearer picture on the environment going forward, we believe results will continue to be choppy,” Simkins further mentioned, while explaining that the company was expected to see limited catalysts in Las Vegas till it could stabilize its Macau operations.

So far, the recovery in Las Vegas has been skewed to the mid-low end market, while baccarat trends have continued to decline.

“We continue to wait on the sidelines in WYNN, as it still has a great brand and has proven it can weather tough times historically,” Simkins added.