Wynn Resorts made huge gains from its operations in Macau. The company posted Q2 earnings of $122 million or $0.97 a share, on revenue of $1.37 billion.
During the earnings call, CEO Steve Wynn went on a huge anti-Obama rant.
The company has however got a mixed response from the market. Citi maintains its sell/medium risk on Wynn Macau (which is owned by Wynn Resorts but trades on the Hong Kong stock exchange) and Wynn Resorts, here’s why:
- Citi analyst George Choi points out that Wynn Macau is the most expensive stock in the Macau gaming market because the market has priced in its Cotai project. Wynn Macau’s earnings beat expectations, but it trailed growth across Macau as a while.
- While Wynn Macau’s new project is underway it is unlikely to open before 2016, and has yet to receive formal governmental approval for the land.
- Citi analyst Anil Daswani believes that Wynn Resorts had better non-casino revenue growth in Las Vegas compared to some competitors but Wynn Macau’s 37% growth was below Macau’s overall 46% growth in the second quarter and could indicate a loss in market share.
- Citi increased its 2011-2013 earnings estimates by 12 – 14% to reflect Q2 results and larger mass market hold in Macau.
UBS analysts are more bullish on Wynn Resorts and maintain their buy rating:
- Wynn is strongly positioned in Macau’s Cotai strip, and is expected to gain market share to about 15% in the second quarter, from 14% the previous quarter. Wynn’s VIP volume in Macau was reported to be up 51% year-over-year.
- The company continues to be strongly positioned in Vegas The company has invested $200 million in the last two years and has seen its volume of international customers up 75%
Barclay’s is also bullish on Wynn Resorts:
- Barclay’s analyst Felicia R. Hendrix expects the company to gain from growth in the Macau market and expects it to outperform Las Vegas’ recovery because of its brand.
- Its Las Vegas properties posted better than expected revenuer per available room (RevPAR) and non-gaming revenues from nightclubs, shows like Garth Brooks all pushed its performance.
Credit Suisse analysts prefer to play the wait-and-watch game with Wynn Resorts:
- “We believe Macau trends, and now Cotai, are getting priced in to shares. We would rather stay on the sidelines and wait for a pullback. Greater clarity on Cotai could get us more constructive.”