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Wynn Resorts Ltd WYNN

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Morningstar’s Analysis

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Economic Moat




Wynn Green Shoots Emerging, but Near-Term Environment Remains Challenging; Shares Cheap

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

The coronavirus dealt narrow-moat Wynn a hard hand in the second quarter, as its U.S. (24% of 2019 EBITDAR) and Macao (76%) resorts were forced to close for most of it, resulting in a 95% decline in sales (similar to the 95% and 97% drops experienced by MGM and LVS, respectively). Further, the recent reacceleration in COVID-19 cases has led to U.S. industry hotel occupancy and air passenger volumes stagnating in mid-July after roughly three months of steady improvement. Also, quarantine efforts in Macao have lingered longer than previously expected, leading us to lower our industry gross gaming revenue 2020 forecast to a mid-50% decline from a mid-40% drop prior. And though we still expect full recoveries in industry sales in both Las Vegas and Macao by 2023 and early 2022, respectively, we expect to reduce our Wynn $112 fair value estimate slightly, keeping shares at an attractive level.

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Company Profile

Business Description

Wynn Resorts operates luxury casinos and resorts. The company was founded in 2002 by Steve Wynn, the former CEO. The company operates four megaresorts: Wynn Macau and Encore in Macau and Wynn Las Vegas and Encore in Las Vegas. Cotai Palace opened in August 2016 in Macau, Encore Boston Harbor in Massachusetts opened June 2019, and various Vegas projects are currently under development. Additionally, the company expects to begin construction on a new building next to its existing Macau Palace resort in late 2021, which we forecast to open in 2025. The company gets 76% and 24% of its EBITDA from Macau and Las Vegas, respectively.

3131 Las Vegas Boulevard South
Las Vegas, NV, 89109
T +1 702 770-7555
Sector Consumer Cyclical
Industry Resorts & Casinos
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Distressed
Employees 30,200