Market Overview

Stifel: Wynn's Quarter-To-Date Results 'Impressive,' But 'Considerable' Overhang Tied To Former CEO Remains

Share:
Stifel: Wynn's Quarter-To-Date Results 'Impressive,' But 'Considerable' Overhang Tied To Former CEO Remains
Related WYNN
Casino Stocks Post Muted Reaction To August Vegas Revenue Data
Fast Money Picks For September 11
Early look at October Macau casino growth (Seeking Alpha)

Wynn Resorts, Limited (NASDAQ: WYNN) offered an update Wednesday on its financial performance and dividend. While the update was "impressive," the company's ongoing regulatory and legal woes create an overhang, making a bullish stance inappropriate, according to Stifel. 

The Analyst

Stifel's Steven Wieczynski maintains a Hold rating on Wynn's stock with an unchanged $186 price target.

The Thesis

Wynn's stock should react to the upside, as multiple financial metrics for the two-month period covered during the presentation were encouraging, Wieczynski said in a Wednesday note. 

The metrics include the following, the analyst said: 

  • EBITDA rose between 27 to 34 percent.
  • Macau EBITDA rose 51 percent at the midpoint.
  • Mass hold at Wynn Palace rose 430 basis points.
  • Las Vegas EBITDA fell 11 percent at the midpoint, but revenue per available room rose 11 percent.

The reported metrics came in ahead of Wall Street's expectations overall and signal that the "unexpected change" in executive leadership hasn't slowed down any momentum that has been building up over the past few quarters, the analyst said.

"To be honest, we are not all [that] surprised by the performance at the company's Macau assets, as the underlying market indicators remain strong, particularly in the segments that resonate most prominently with WYNN's core customer base," Wieczynski said. 

"Furthermore, given the cultural differences that exists, we did not expect the allegations against Mr. Wynn to materially impact the core Chinese customer's intent to visit." 

The sexual misconduct allegations against former CEO Steve Wynn represent a "considerable regulatory/legal overhang on the story at this point," and the full magnitude of the scandal's impact on valuation is "incredibly difficult to accurately measure," the analyst said. 

Price Action

Wynn Resorts shares were up nearly 7 percent at $180.14 at the time of publication Thursday afternoon. 

Related Links:

Height Sees Little Risk To Wynn Licenses

Morgan Stanley: Our Bullish Wynn Resorts Thesis No Longer Applies

Latest Ratings for WYNN

DateFirmActionFromTo
Aug 2018JefferiesDowngradesBuyHold
Aug 2018Credit SuisseInitiates Coverage OnNeutral
Aug 2018ArgusDowngradesBuyHold

View More Analyst Ratings for WYNN
View the Latest Analyst Ratings

Posted-In: gaming Las Vegas Macau Steven WieczynskiAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

 

Related Articles (WYNN)

View Comments and Join the Discussion!
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Near-Term Catalysts, Long-Term Opportunities Make Quidel A Strong Buy, Says Raymond James

5 Misconceptions About The $20 Trillion Of U.S. Debt