UBS’ Robin M. Farley upgraded the rating for Wynn Resorts, Limited WYNN from Neutral to Buy, while raising the price target from $73 to $95.
Although gaming stocks with Macau exposure had gained 20 percent year-to-date, their risk reward profile had improved, given stabilization in Gross Gaming Revenues, or GGR, in Macau, analyst Robin Farley mentioned.
There has been a sequential stabilization in mass revenues for three quarter and in VIP revenues over two quarters. The analyst expects 2016 GGR revenues to grow 2 percent, with overall positive y/y growth beginning in 2Q-3Q.
“March may come in with a decline of high single digits to low to mid-teens, perhaps down -8-13%, a little more down than the -12% decline in Jan-Feb but an improvement from Q4 declines of -27%,” Farley added.
Other Risk Mitigating Factors
Farley identified certain other risk mitigating factors as:
- The risk of a tightened smoking bank lessening in recent months
- Relaxation of transit visa regulations resulting in improved visitor growth
- Better clarity about the delay of new projects
- Junked system stabilization
- Subsiding of anti-corruption campaign
- Improving property market in China
The resolution of or more clarity into these issues is expected to reduce the outlook uncertainty for Macau and for Wynn, the analyst commented.
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