One major Wall Street firm gave Wynn stock a big upgrade.
Wynn Resorts (NASDAQ:WYNN) stock has been on the move, rising nearly 2% Thursday and surging about 13% over the past five days.
The catalyst on Thursday was an upgrade from analysts at UBS, which rated Wynn stock as a buy, up from neutral.
UBS also pushed the price target up by $46 to $147 per share. That would represent about a 17% increase over the current share price. Wynn has a median price target among the 21 analysts that cover it of $124 per share, which is down about 1% from current levels.
But UBS is bullish on Wynn, citing increased revenue estimates for its Macau resorts as well as a more bullish view of its luxury resort currently being built in the United Arab Emirates (UAE), the Wynn Al Marjan Island. The 1,500-room resort is set to open its doors in early 2027.
In a research note, UBS said Wynn should grab a “meaningful head start in capturing loyalty among ultra-high net worth international customers” as the first gaming operator in the UAE.
Back in July, UBS had raised Wynn’s price target by $18 to $101 per share, so in the past two months, UBS has upgraded Wynn twice by a total of $64 per share.
For the Wynn
Wynn stock has been on a strong run the past week or so, with tailwinds coming from its deceptively solid Q2 earnings report. Yes, Wynn fell short of earnings estimates and was in line with revenue projections. But investors were impressed by Wynn’s strength in its Las Vegas hotels, which saw a 10% revenue increase.
This is notable as Vegas tourism has experienced a significant decline, and its chief rivals, MGM and Caesars, have seen their Vegas revenue decline in Q2.
Also, the earnings miss is largely due to lower-than-expected VIP holds in its Macau properties, which is the money that the casino holds from its VIP customers. It resulted in a roughly $13 million revenue hit. But investors seem to be more impressed that Wynn saw higher volumes overall in Macau, including among VIP customers.
As Wynn caters to more VIP, high-stakes gamblers, it may be better positioned than others to navigate a choppy market, particularly in Vegas. Investors also see long-term growth potential with the Wynn Al Marjan Island project.
Wynn did not provide any guidance, but its Vegas results are promising. And it should continue to see solid growth in Macau, as UBS expects. Wynn gets about 50% of its revenue from Macau and gambling has been growing there on the whole. However, Wynn did have mixed results in Macau in Q2 with Wynn Palace revenue down, while Wynn Macau revenue was up. That bears watching.
The stock has returned an impressive 45% year-to-date, including 13% this week. One concern is that the stock is a little pricey, trading at 36 times earnings. Given the mixed results in Macau, does the company have the earnings power to justify that multiple in the short-term?
