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Macau's Wynn Palace Will Be A Game Changer

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Macau's Wynn Palace Will Be A Game Changer

Despite Wynn Resorts, Limited (NASDAQ: WYNN) being the “best share price performer” year-to-date, Citi’s Anil Daswani believes that there is plenty of upside potential remaining.

The analyst maintained a Buy rating on the company, while raising the price target from $101 to $117. The analyst also named the stock as Citi’s Top U.S. Large Cap Gaming Pick.

Wynn Palace

“We like the earnings improvement that the new Macau and US properties will likely bring to Wynn, yet the 0.59 ex-cash PEG at Wynn Resorts suggests the earnings impact is being mispriced,” Daswani mentioned.

Related Link: Why Cramer Loves Alcoa And Wynn

Daswani expects Wynn Resorts’ gearing to improve gradually to the industry norm, following the opening of Wynn Palace in 3Q.

In fact, the analyst estimated Wynn Palace’s EBITDA at R129 million in 2016, which reflects expectations of the facility opening in mid-August. For its first full year of operations, in 2017, Wynn Palace is expected to generate EBITDA of $594 million, growing to $687 million in 2018.

Wynn Paradise Park

The company recent announced plans to spend $1.6 billion to convert its Las Vegas golf club into a resort, which has tentatively been named Paradise Park.

“We forecast Wynn Paradise Park to generate EBITDA of US$258m in its first full year of operations in 2020, implying an ROIC of ~16 percent,” Daswani stated, while adding, “Given the heavy focus on non-gaming amenities at this project, we anticipate a roughly 20:80 revenue split between gaming and non-gaming.”

Image Credit: Public Domain

Latest Ratings for WYNN

DateFirmActionFromTo
Mar 2019Morgan StanleyMaintainsEqual-WeightEqual-Weight
Jan 2019Deutsche BankMaintainsBuyBuy
Nov 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight

View More Analyst Ratings for WYNN
View the Latest Analyst Ratings

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