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.