Analyst Sees Casino Resorts Potential in Wynn Resorts Stock as a Catalyst-Rich Investment

While stock performance is already on fire, analysts believe there is significant room for more upside as demand for luxury amenities continues to drive growth within the premier casino resorts sector.

Case can be made Wynn is still a value stock.

Shares of Wynn Resorts (NASDAQ: WYNN) have surged nearly 48% since the start of the year, with most of this rise occurring over the last three months. As the stock edges close to its 52-week highs, analysts suggest there remains significant potential for further gains.

Las Vegas — Image by Signboy58 from Pixabay

According to Stifel analyst Steven Wieczynski, a “buy” rating on Wynn remains firmly in place, coupled with a revised price target of $145, which suggests an upside of about 20% based on current trading levels. This boost in expectations is driven by the sustained recovery in Macau and the increasing clarity surrounding Wynn’s projects in the United Arab Emirates (UAE).

“We believe there are multiple catalysts on the horizon that should allow shares to further appreciate over the next six to twelve months,” notes Wieczynski. “Valuation remains underwhelming and continues to discount the recovery in Macau, in our opinion.”

Wieczynski emphasizes that Macau’s robust recovery trajectory for 2025 suggests that the market may be overly pessimistic regarding the long-term gross gaming revenue (GGR) outlook in the region. Wynn’s strategy of focusing on premium mass customers and VIP visitors is poised to underpin its future growth.

Why Wynn Stock May Be Overvalued

Wieczynski presents a compelling multi-faceted argument for why Wynn’s shares may be fundamentally undervalued, even with the recent rally.

As of now, the stock has closed just below $129. The analyst estimates that Wynn’s Las Vegas assets alone are worth about $55 per share. An additional $3 can be attributed to the company’s unused land in Las Vegas. Another $10 per share comes from Encore Boston Harbor, while Wynn’s aspiring UAE casino resort is valued between $18 and $25 per share, which can reasonably be pegged at $20. In addition, the operator enjoys another $11 per share from its Macau royalty stream, amounting to $99 altogether — indicating that the two Macau properties account for a mere $30 of the current share price.

These estimates could appear conservative given that Wynn Macau plays a significant role in the overall earnings before interest, taxes, depreciation, and amortization (EBITDA) and revenue.

“Regardless of what environment you want to project for Macau, it is not justifiable to assign a valuation of roughly ~$20/share to their Macau assets,” asserts Wieczynski. “This line of reasoning seems fundamentally flawed. If you take Wynns’ current market cap, about $12.7B, and deduct their share in HK1128, their non-Macau assets would effectively be worth around $90/share, thus implying their Macau assets should be valued at least at $30/share. This uncomplicated math tends to go overlooked among investors, yet there must be a recognition of greater value (~$20/share) attributed to their Macau operations sometime down the road.”

Catalysts Abound for Wynn Stock

The plethora of catalysts expected for Wynn in the coming six to twelve months is impressive, including several UAE investor presentations scheduled for December. The commitment of resources and time to these events likely indicates that Wynns’ management is expecting positive outcomes from these discussions.

Other potential catalysts highlighted by Wieczynski encompass Wynn’s capacity to secure higher profits from its Macau segments as well as a resilience in Las Vegas against the negative factors impacting the broader casino landscape.

“We truly believe WYNN presents one of the more attractive buying opportunities under-evaluated across our coverage landscape,” concludes Wieczynski. “With numerous catalysts on the horizon and substantial upside potential relative to our conservative projections, we recommend taking a constructive position on WYNN shares at present levels, considering the risk/reward landscape appears very appealing.”

In summary, the analysis suggests that Wynn Resorts continues to navigate through a dynamic market environment with promising growth prospects driven by multiple catalysts. With a strong focus on high-value customers and upcoming strategic projects, Wynn seems to showcase a significant upside potential for investors looking for opportunities in the gaming sector.