Wells Fargo Upgrades Wynn and Raises Target; Catalysts Expected to Drive Outperformance

By Vlad Schepkov

Analysts from Wells Fargo have noted significant macro improvements across Wynn Resorts’ key business areas. As a result, they have upgraded the company’s rating to ‘Overweight’ from ‘Equal Weight’, increased their price target from $74 to $101, and included the stock in Wells Fargo’s "Tactical Ideas list."

In their recent assessment of the prominent casino and hotel operator, the analysts highlighted several factors that contributed to the upgrade:

1. Wynn Resorts has a clear opportunity to recapture much or all of its 2019 VIP EBITDA, which they believe is not yet reflected in the stock price.

2. The company is significantly linked to the recovery of Macau’s gross gaming revenue (GGR), an improvement that has become more evident following China’s policy changes, providing a strong growth opportunity in the gaming sector.

3. Wynn’s smaller scale and focus on premium mass offerings are anticipated to facilitate a quicker recovery.

The analysts pointed out that "company-specific catalysts," along with an attractive valuation at 10x projected 2024 EV/EBITDA—below its historical average of 11x and 12-14x during times of rising GGR—are expected to drive outperformance of the stock in the upcoming quarter.

Wynn Resorts’ shares saw a 2.5% increase on the first trading day of 2023, following a relatively flat performance throughout 2022.