Wynn Resorts included on Deutsche Bank's new Q3 funding list
Wynn Resorts (NASDAQ: WYNN ) stock has been added to Deutsche Bank's new money list for the third quarter following a strong first half. Here's a collection of stocks the bank's analysts strongly believe in.
Wynn, which has a buy rating, is one of six consumer stocks and the only gaming stock on the new money list. Past performance is no guarantee of future profits. But Wynn's inclusion on the list is noteworthy because since Deutsche Bank launched the new funding group in the third quarter of 2017, the stock collection has returned 167%, compared with the S&P 500's 124% return. Rolling performance over the past 12 months The bank's data over the past four months showed that quarterly performance outperformed the domestic equity benchmark by 7.42%.
For Wynn in particular, analyst Carlo Santarelli sees more upside potential for the stock in the second half of 2023. That's because the stock is cheap, there's more to come about Macau's recovery, and market participants aren't yet fully convinced, including the operator's Wynn Al-Marjan island in the United Arab Emirates (UAE).
The venue is the first of its kind in the Middle East and is scheduled to open in early 2027. Santarelli has a $140 price target on Wynn, which would represent an upside of about 38% from Friday's closing price.
Wynn is cheap and has multiple catalysts
Wynn shares currently trade at a discount to their long-term averages, a potentially distinguishing feature as investors fret about stretched valuations for many of the growth and technology stocks that drove the market higher in the first half of this year.
Wynn shares currently trade at 9.2 times 2024 adjusted EBITDA guidance. From 2017 to 2018, Wynn stock traded at an average EV/EBITDA multiple of 13.0x," Santarelli wrote."Simply put, if Wynn resumes its historical P/E multiple based on our current 2024 EBITDA guidance, if our estimate To be accurate within a 10% range, we expect the stock price to potentially rise $45-$85. "
As for the UAE project, in which Wynn will hold a minority stake of about 40%, the region's first casino resort could generate as much as $600 million in profits as earnings before interest, taxes, depreciation, and amortization (EBITDA) rise. However, Santarelli believes these expectations are not reflected in Wynn's current stock price.
"Based on our property-level analysis and our assumptions on the details of the management agreement, we believe the project's current equity value is $10 to $14 per share, with none currently anchored in equity. We note that our $140 target The price does not include any contribution from development projects in the UAE," the analyst added.
Other underestimated factors
While Macau is recovering in earnest and its importance to Wynn's investment philosophy is well known, Santarelli said there are several factors that could be working in Wynn's favor that are currently not fully recognized by market participants.
These include the operator's ability to reduce labor costs, higher margins on its VIP business and a superior gross gaming revenue (GGR) mix, which could help Wynn Macau achieve its highest profit margins before the coronavirus pandemic.
Deutsche Bank analysts also noted that Wynn's plans to expand Encore Boston Harbor and its efforts to obtain a New York City casino license have not yet received enough recognition from investors.
“We believe the WYNN development was well-positioned during the competitive process and we believe the project, located in Manhattan’s Hudson Yards neighborhood, will generate strong returns,” Santarelli concluded.
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Source: www.casino.org
