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MORGAN STANLEY: Here’s how Wynn Resorts could double (WYNN)

Macau WynnAP

Wynn Resorts could see its share cost double as the company grows its market share in Macau, according to investigate by Morgan Stanley.

Wynn now owns two casinos in Macau-the Wynn Macau non-stop in 2006 and the Wynn Palace non-stop in 2016.

“We trust that WYNN can take larger marketplace share in Macau than the marketplace is now discounting,” a group of analysts led by Thomas Allen noted.

“With intensity for larger marketplace growth, aloft margins, and a beat-and-raise driven re-rating, we see 20% upside to the WYNN bottom case and 100% upside to the longhorn case,” they said, holding a opposite perspective from the street accord that foresee minimal gains in marketplace share.

The group was bullish on Wynn’s prospects in Macau formed on 3 factors: Google hunt trends, auspicious marketplace trends and Wynn’s chronological opening in Macau.

“Google searches for WYNN’s Macau properties have recently surpassed Galaxy and MPEL, a intensity heading indicator for much aloft marketplace share,” they noted.

Screen Shot 2017 03 13 at 10.19.33 AMMorgan Stanley

Next comes Macau’s untapped market, which is another partial of their bull case.

“Macau’s annual invasion ratio (calculated as the series of Chinese visitors to Macau divided by China’s population) was just 2.6% in 2015,” they noted, “significantly next the 13% invasion of US visitors to Las Vegas.”

Screen Shot 2017 03 13 at 10.23.13 AMMorgan Stanley

Finally, Wynn’s trackrecord of clever opening is also enlivening to these analysts.

“In Wynn Macau’s first 4 buliding of operation, it averaged 15.4% marketplace share, scarcely 240bps aloft than the 13.0% achieved in its first full entertain in 4Q06,” they noted. “This is the largest boost of fashion major casino openings in Macau.”

Screen Shot 2017 03 13 at 10.31.13 AMMorgan Stanley

The analysts also presented their bear case, a 45% downside from stream price, which could essentially outcome from a deceleration in the expansion of VIP and mass marketplace gaming revenue.

Wynn reported diluted gain per share of $2.38 for mercantile year 2016, as against $1.92 in 2015. Revenues in the fourth entertain of 2016 increased 37.3% to $1.3 billion, which the company attributed essentially to $418.7 million in revenues from Wynn Palace.

Wynn shares are up some-more than 3% on Monday.

Screen Shot 2017 03 13 at 11.07.38 AMMarkets Insider

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