Wynn Resorts could see its share price double as the company grows its market share in Macau, according to research by Morgan Stanley.
Wynn currently owns two casinos in Macau — the Wynn Macau opened in 2006 and the Wynn Palace opened in 2016.
The team was bullish on Wynn’s prospects in Macau based on three factors: Google search trends, favourable market trends and Wynn’s historical performance in Macau.
“Macau’s annual penetration ratio (calculated as the number of Chinese visitors to Macau divided by China’s population) was just 2.6% in 2015,” they noted, “significantly below the 13% penetration of US visitors to Las Vegas.”
Finally, Wynn’s trackrecord of strong performance is also encouraging to these analysts.
The analysts also presented their bear case, a 45% downside from current price, which could primarily result from a deceleration in the growth of VIP and mass market gaming revenue.
Wynn reported diluted earnings per share of $US2.38 for fiscal year 2016, as against $US1.92 in 2015. Revenues in the fourth quarter of 2016 increased 37.3% to $US1.3 billion, which the company attributed primarily to $US418.7 million in revenues from Wynn Palace.
Wynn shares are up more than 3% on Monday.
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