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Susquehanna Upgrades Wynn Resorts Following CEO Departure: 'A Compelling Risk-Reward'

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Susquehanna Upgrades Wynn Resorts Following CEO Departure: 'A Compelling Risk-Reward'
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Wynn Resorts, Limited (NASDAQ: WYNN) investors have had a bumpy ride in 2018 after CEO Steve Wynn was accused of sexual misconduct. After Wynn resigned from his position Tuesday, Susquehanna is refocusing on the company's performance. 

The Analyst

Susquehanna analyst Rachael Rothman upgraded Wynn Resorts from Neutral to Positive and set a $211 price target for the stock.

The Thesis

Wynn resorts has a number of positive catalysts now that the company's namesake has stepped down, Rothman said: 

  • Macau reported its highest gross gaming revenue growth in January since 2014, and Susquehanna projects those positive trends will continue.
  • Wynn has a sizable exposure to the Macau market, particularly the high-end VIP segment.
  • The CEO's departure could have a material positive impact on the performance of the company’s Las Vegas properties.
  • A settlement with former board member Kazuo Okada would remove another uncertainty for investors.

In addition to the factors mentioned above, Rothman said Wynn investors should consider other potential catalysts that could have either a positive or negative impact on the stock depending on how they play out:

  • A decision on what, if anything, Steve Wynn will be forced to do with his 11.8-percent stake in the company.
  • The potential for a settlement with Elaine Wynn, who was removed from the board in 2015.
  • The cost of a severance package for Steve Wynn, which could be up to $300 million.

Overall, Rothman is bullish on the recent developments.

“The resignation of Steve Wynn clears the way for the market, and investors, to return their focus to fundamentals, which remain robust, and make the stock a compelling risk-reward on a probability-weighted scenario basis."

Price Action

After gaining 8.6 percent on Wednesday following Wynn’s resignation, the stock was trading lower by 3.47 percent at $171.16 midday Thursday.

Related Links:

Steve Wynn Steps Down As Chairman And CEO, Says 'Judgment Takes Precedence Over Everything Else, Including The Facts'

Reputation Expert: Wynn Must Distance Itself From CEO To Protect Gaming Licenses, Brand

Photo by Photographersnature/Wikimedia.

Latest Ratings for WYNN

DateFirmActionFromTo
Apr 2018NomuraMaintainsBuyBuy
Apr 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight
Apr 2018Stifel NicolausMaintainsHoldHold

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