Wednesday, February 28, 2007

Color on quarter: Wynn Resorts (NASDAQ:WYNN)

Several firms are positive on Wynn Resorts (NASDAQ:WYNN) after the co issued strong results last night:

- Goldman Sachs notes Wynn reported operating EPS of $0.53 vs $0.04 and ahead of their $0.44 estimate and consensus of $0.47. Upside to firm's estimate due to higher EBITDA ($140mn vs our $122mn estimate after corporate exp). Wynn beat their property EBITDA estimates in both Las Vegas and Macau.

Wynn reported a solid 4Q06 and demonstrated that the Las Vegas property is on track to show improving operating leverage and that the Macau property is building up a significant VIP customer base and is ready to start more aggressively targeting the mass market. Non-gaming trends (retail sales, F&B, etc.) at Wynn Macau continue to have positive implications for the market as more amenities come online. Firm is maintaining their $2.15 2007E and $2.70 2008E EPS estimates. They are also establishing a 2009E EPS estimate of $3.05. Maintains Neutral rating.

- Deutsche Bank says thy believe that is still early in the game for WYNN and that there are a number of initiatives that could provide incremental upside. Details on WYNN Cotai, development of the Las Vegas golf course to a casino resort (s), plus the potential for opportunities in new markets could serve as catalysts. Firm's price target is $120 (from $122), reflects increased Encore scope (10.5x multiple of LV cash flows and 12x for Macau). Risks to shares include economic (U.S., China, and broader Asia region), competitive, regulatory and development.

- Jefferies says they are maintaining Buy rating and raising their price target to $111.50 from $90 on WYNN shares. The substantial raise in price target is mainly due to: 1) 9.33 of value for the addition of a very high-end hotel casino adjacent to Wynn Macau. 2) They are now giving Wynn's 142 acres of underdeveloped land on the Las Vegas Strip $20mm/acre (an increase of $9.45/share). This reflects the combination of $15mm/acre, the same the firm currently gives Buy-rated MGM and Buy-rated Boyd ($46.92) for their land and $5mm/acre to reflect a portion of the upside potential the company should have from developing such land into a must-see casino project. Firm anticipate Wynn making a formal announcement on this land later this year. Their main thesis on the stock continues to be the development pipeline. They look forward to more results out of Macau and the opening of the Encore in Las Vegas (beginning of 2009) along with 52 acres of land to develop in Cotai (Macau), 142 acres on the Las Vegas Strip and a high- end boutique hotel-casino adjacent to Wynn Macau (2Q09).

Notablecalls: Expect to see buy interest in WYNN today. I was somewhat surprised by the gneral lack of interest in WYNN in after market action but I guess it was due to market participants not wanting any real exposure ahead of today's opening of markets. Now however it looks like there will be at least some buyers showing up early on.

1 comment:

Mark said...

Maybe little action on WYNN stock due to:
Wynn quarterly loss widens; revenue more than doubles
4:25 PM ET, Feb 27, 2007 - By Katherine Hunt - 15 hours ago
SAN FRANCISCO (MarketWatch) -- Wynn Resorts Ltd. after Tuesday's closing bell reported a fourth-quarter net loss of $55.4 million, or 55 cents a share, compared with a net loss of $9.89 million, or 10 cents a share, during the year-ago period. Adjusted earnings were $57.1 million, or 53 cents a share, vs. adjusted earnings of $6.46 million, or 8 cents a share, last year. Net revenue at the Las Vegas-based casino resort operator rose to $563.6 million from $269.4 million. Analysts surveyed by Thomson Financial had forecast fourth-quarter earnings of 47 cents a share on revenue of $500 million.

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