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Wynn Resorts Ltd WYNN

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Morningstar’s Analysis

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5-Star Price

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Economic Moat

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Capital Allocation

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Wynn Doubling Down on Sport Betting and IGaming with Its Austerlitz Merger

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

Like peers, narrow-moat Wynn is seeing both Macau (76% of 2019 EBITDA) and U.S. (24%) demand accelerate in recent months, harmonizing with our forecast. But we think the main takeaway for investors from first-quarter results is that Wynn announced its sports betting and iGaming platform, Wynn Interactive, annualized gross gaming revenue at around $103 million in March, up from $48 million in December, with guidance for this to reach around $700 million in 2023 revenue (around 11% of total estimated sales). When the merger with Austerlitz closes by the end of this year, it will provide $640 million to invest behind the business. Given this strength we plan to increase our outyear sales forecast for Wynn Interactive, leading to around a mid-single-digit percentage increase to our Wynn $110 fair value estimate, leaving shares still overvalued.

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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 Macao and Wynn Las Vegas and Encore in Las Vegas. Cotai Palace opened in August 2016 in Macao, Encore Boston Harbor in Massachusetts opened June 2019, and various Vegas projects are currently under development. Additionally, we expect the company to begin construction on a new building next to its existing Macau Palace resort in late 2021/early 2022, which we forecast to open in 2025. The company also operates Wynn Interactive, a digital sports betting and iGaming platform. The company received 76% and 24% of its 2019 prepandemic EBITDA from Macao and Las Vegas, respectively.

Contact
3131 Las Vegas Boulevard South
Las Vegas, NV, 89109
T +1 702 770-7555
Sector Consumer Cyclical
Industry Resorts & Casinos
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Distressed
Employees 27,500

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