Wynn Resorts
stock was upgraded by
Barclays
analysts as the Macau casino recovery gathers pace and Las Vegas operations remain strong in the face of tough macroeconomic conditions.
The casino operator’s shares (ticker: WYNN) were upgraded to Overweight from Equal Weight by Barclays analysts, who raised their price target to $135 from $120, implying a 31% upside to Tuesday’s price.
The stock has climbed 25% so far this year, as of Tuesday’s close, but much of those gains came in January and February. The shares are currently trading 11% below their highest 2023 closing price on March 3.
“Macau’s ramp to full Ebitda [earnings before interest, taxes, depreciation, and amortization] recovery continues to pull forward, which could come as early as the second half of 2023, indicating plenty of potential upside to consensus in the coming quarters, while shares have mostly traded sideways for the last three months,” analysts, led by Brandt Montour said in a note Wednesday.
Wynn’s Macau property portfolio returned to profitability in the first quarter, as the company posted adjusted Ebitda of $155.8 million, up from a $5.5 million loss the previous year, and at around 40% of 2019 levels.
For the company’s Macau Ebitda to reach 2019 levels, gross gaming revenue in the region needs to hit an annual run rate of $26.5 billion, CEO Craig Billings said on its earnings call last week. Macau data from April revealed an annual run rate of $22 billion, just a few months after travel restrictions were lifted.
“Evidence is accruing that Wynn’s Macau business is heading for 2019 Ebitda generation faster than we (or we think anyone) thought, and soon we could be talking about ‘how much above 2019’,” Montour said.
It’s not just the Macau recovery that’s exciting Barclays, it’s also the strength of Wynn’s Las Vegas operations. The company reported a record $232 million adjusted property Ebitda in Las Vegas in the first quarter. It then had its best ever April, management said on its earnings call.
Billings said that was achieved “despite the confluence of high inflation, high interest rates, bank failures and increasingly difficult year-over-year comparables.” Wynn Las Vegas then had its best ever April, management said on its earnings call.
Barclays analysts said they didn’t get the sense that things were slowing down in Vegas and that the return of international visitors could be a tailwind through this year and next.
“We increasingly believe Wynn will be able to hold onto recent property performance in Las Vegas in spite of macro conditions worsening, or at least hold in better than we think current investor expectations assume,” they said.
Wynn stock pointed close to 3% higher at $105.77 ahead of the open Wednesday.
Write to Callum Keown at [email protected]
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