On Wednesday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Wynn Resorts (NASDAQ:WYNN), reducing the price target to $118 from the previous $125, while still affirming an Outperform rating on the stock. This adjustment follows Wynn Resorts' announcement of third-quarter earnings that fell short of expectations, with consolidated property EBITDA reaching $527.7 million, below the analyst's projection of $564 million and the Street's expectation of $549.1 million.
The shortfall was primarily attributed to weaker performance in Macau, where EBITDA was reported at $262.9 million, compared to Mizuho's estimate of $300.1 million and the Street's forecast of $284.1 million. The lower figures in Macau for August and September led the firm to revise its fourth-quarter and 2025 estimates for Wynn Resorts.
Despite the recent data indicating a dip in market share for Wynn in Macau, the firm noted that Wynn Resorts is actively pursuing initiatives to improve its market position. Although there is an indication that October may have shown some improvement, the analyst expressed concern that the variability in month-to-month results could present risks for the stock in the short to medium term.
The analyst remains optimistic about Wynn Resorts' long-term prospects. The company's premium assets are expected to benefit from the recovery in Macau, such as potential stimulus measures. Additionally, Wynn Resorts is well-placed in Las Vegas, with unique assets and the potential to expand its convention space. Furthermore, the firm highlighted the underappreciated long-term potential of Wynn Resorts' expansion into the United Arab Emirates.
In other recent news, Wynn Resorts has been the subject of financial firms' analysis following its third quarter 2024 earnings report. The company reported a moderate increase in revenue and profitability, with a 1% rise in normalized revenue in Las Vegas, a 5% increase in hotel revenue in the same city, and a 4% growth in slot handle. Moreover, Encore Boston's EBITDAR rose by 4% year-over-year, reaching $63 million, while Macau operations saw a 3% increase in EBITDA, with a 6% rise in operating revenue.
Stifel, a financial services firm, raised Wynn Resorts' stock price target to $125 from $103, maintaining a Buy rating. The firm believes the company's shares are trading at a significantly discounted multiple and expects the valuation of Wynn's Macau assets to rise as the market recovers.
In contrast, Citi maintained a Buy rating but adjusted the price target to $116 from $121, citing a modest shortfall in the third quarter 2024 results. The company's management expressed favorable expectations for the upcoming Formula 1 event in Las Vegas and reported a healthy Mass table drop and a 99% hotel occupancy rate in Macau in October 2024.
InvestingPro Insights
Recent InvestingPro data provides additional context to Mizuho Securities' analysis of Wynn Resorts. Despite the reduced price target, Wynn's financials show some positive indicators. The company's revenue growth of 25.16% over the last twelve months and an impressive gross profit margin of 69.09% demonstrate strong operational performance, aligning with Mizuho's long-term optimism.
However, InvestingPro Tips highlight some challenges. The stock has taken a significant hit over the last week, with a 1-week price total return of -11.95%, and has fared poorly over the last month with a -17.76% return. This volatility corresponds with Mizuho's concerns about short to medium-term risks.
On a positive note, Wynn operates with a moderate level of debt and has liquid assets exceeding short-term obligations, which could provide financial flexibility as the company pursues market share improvements in Macau and expansion in the UAE.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Wynn Resorts, providing deeper insights into the company's financial health and market position.
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