UBS Downgrades Wynn To Neutral, Cites Valuation

Wynn Resorts, Limited (NASDAQ: WYNN) shares have gained 37 percent year-to-date. UBS’s Robin M. Farley downgraded the rating on the company from Buy to Neutral, while maintaining a price target of $98.

Following the run-up, Wynn’s shares already reflect Macau’s improving trends, a good opening of Wynn Palace on Cotai and potential for positive GGR comps in Macau by 4Q16 [implying a slower rate of recovery in gross gaming revenue], analyst Robin Farley said.

Wynn Palace Priced In

Wynn Palace’s good opening already seems to be priced into the stock, since shares are currently trading at merely ~2 percent below the price target, and additional upside in the near term is unlikely, Farley stated.

Related Link: Vetr Top Raters Are Bullish On Wynn Resorts

“While Wynn Palace will be opening in a more stable gross gaming revenue environment than Galaxy Macau or MSC, we believe the property's opening in Aug before Parisian opens between Sept and year end could cap upside to expectations,” the analyst wrote.

Moreover, Wynn may not be able to implement its more typical strategy of overstaffing and then reducing excess labor at its property in Cotai. Farley added that Wynn Palace and Las Vegas Sands Corp’s (NYSE: LVS) Parisian each represents a 4 percent increase in tables games in the market; and Wynn is expected to add 8-9 percent to hotel supply, while Parisian would add 13-14 percent.

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