Analysts See Value In Wynn Resorts Following Recent Sector Pullback

JPMorgan analyst Joseph Greff argued that there is a disconnect between Wynn Resorts’ (WYNN) current operating fundamentals and investor sentiment, viewing the recent sector pullback as a buying opportunity. Sharing a similar opinion, his peer at Deutsche Bank added that he would be a buyer of the stock given the current valuation and as conditions in Macau remain stable in both the VIP and mass segments.

‘CONSIDERABLE AMOUNT OF VALUE’: After hosting investor meetings with CFO Craig Billings, JPMorgan’s Greff told investors that he believes there is a disconnect between Wynn Resorts’ current operating fundamentals and investor sentiment. With the stock down from $200 in late May, the analyst sees considerable among of Macau/China trade tension and emerging market risks baked in the current valuation multiple. As such, he sees a “considerable amount of value” at current share levels. Much of what the company is currently saying about Macau is similar to what it said on the second quarter earnings conference call in August, he pointed out, adding that he did not pick up on any incremental concerns on junket liquidity or negative trend change in player/junket collections, issues that have caused weakness in the Macau sector in the last week alone. Further, Greff highlighted that Wynn continues to be optimistic about premium mass and overall mass trends and its ability to grow market share here. The analyst reiterated an Overweight rating and $191 price target on the stock and said he views the recent sector pullback as a buying opportunity. Meanwhile, Deutsche Bank analyst Carlo Santarelli told investors that he believes conditions in Macau remain stable in both the VIP and mass segments. While he recognized the overhangs of the China macro backdrop and the trade war, he can point to many instances of similar climates that served as “superb buying opportunities”. Santarelli attributed the recent pullback in shares of Wynn Resorts to at least one larger seller, cautious junket commentary, muted reactions to positive catalysts, and concerns around Las Vegas (LVS) fundamentals in the third quarter. But with valuation levels akin to the fall of 2015, he would be a buyer of the stock. Santarelli reiterated a Buy rating and a $190 price target on the stock.