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Wynn Resorts (WYNN) Well Poised for Growth, Risks Remain


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On Sep 29, we issued an updated research report on the leading developer, owner and operator of casino resorts – Wynn Resorts Ltd. (WYNN - Analyst Report) .

Wynn Resorts’ strong brand portfolio and improved non-gaming revenues bode well for the company. The company’s properties in Las Vegas are cashing in on the favorable trends of improving employment rate and positive tourism numbers,

Moreover, in order to boost performance in Vegas, the company has undertaken remodeling of its rooms. Also, the company’s casino resort, expected to open in Massachusetts in 2019, would further strengthen its presence in the U.S. market.

However, the Macau region had been struggling over the past few quarters due to the Chinese government’s anti-graft corruption drive, which lowered footfall at casinos.

Nevertheless, the company’s consistent efforts to boost tourism and traffic in Macau yielded results. It managed to turn around its operations in the region as evident in its second quarter of 2016 results. Wynn Macau’s revenues increased 3.6% year over year in the quarter.

Moreover, with the Chinese government considering measures to support Macau’s economy and introduce favorable policies, tourism in the region is expected to get a boost.

WYNN RESRTS LTD Price and Consensus

Furthermore, on Aug 22, 2016, the company unveiled the Wynn Palace resort in the Cotai area of Macau. The company’s full-scale integrated resort is already seeing visits from tourists and leisure gamblers, which should fortify the company’s position in the Cotai strip.

Notably, such projects are expected to draw business and leisure travelers, and provide a solid platform for growth. In fact, building resorts in Asia should help the company capitalize on the strong consumer spending trend in the region.

However, this property is expected to face extreme peer pressure from several Chinese casino operators, the Sands Cotai Central project of Las Vegas Sands Corp. (LVS - Analyst Report) , the City of Dreams operated by Melco Crown Entertainment Ltd. (MPEL - Snapshot Report) and also the upcoming project of MGM Resorts International (MGM - Analyst Report) .

Also, the company’s heavy reliance on debt financing remains a concern as owing to a higher debt burden, the company may fail to finance its upcoming projects.

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