Global gaming operator Wynn Resorts is positioned at the “sweet spot” of gaming due to its premium offering and high-end customer demographic – a position tht will only be further boosted by the impending launch of its US$5.1 billion Wynn Al Marjan Island integrated resort in the UAE, according to Truist Securities.
The investment bank initiated coverage of Wynn this week with a “Buy” rating and target price of US$125 per share. The company’s shares are currently trading at US$97.93.
Pointing to Wynn’s presence in the key markets of Macau and Las Vegas – as well as Encore Las Vegas and recently acquire Wynn Mayfair in London – Truist analysts Barry Jonas, Jeremy Jacoby and Patrick Keough noted that Wynn’s properties are skewed towards more affluent and resilient customers at resort properties in desirable locations. Wynn Las Vegas, they added, thrives at the highest end of the market, making recent market softness less of an issue, while in Macau – where it operates two integrated resorts in Wynn Palace and Wynn Macau – the company is well positioned at the important premium mass level with a new hotel tower planned to boost capacity.
However, “We’re most excited by Wynn’s upcoming UAE property,” the analysts said, “where eventual calm in the Middle East and meaningful first movers advantage could lead to a dominant market position for years to come.
“For UAE, lasting peace in the region is uncertain and players appetite to gamble in the market is unknown. We are, however, of the view that tourism should recover/normalize in the near term as regional risk fades and the government potentially increases spending to help accelerate a recovery.”
Truist estimates up to US$50 per share in incremental value to the stock based on Wynn’s 40% ownership and receipt of a management fee, adding, “We are not so concerned over exact timing (currently a ‘modest delay’ is expected) as there may not be any direct competition for years to come, and the property has the potential to become one of the highest EBITDA generating properties in the world.”
