Morningstar

Morningstar, Inc.

Equity Bottom-Up

We view Wynn Resorts as a high-end iconic brand that is well positioned to participate in the attractive long-term growth opportunity of Macau (77% of 2018 EBITDA), as it has expanded its room share in the region to 9% from 6% through the August 2016 opening of the Palace in the popular Cotai region. The offset to this expanded room presence is the expected long-term shift away from VIP and gaming revenue (where Wynn has outsize exposure) toward nongaming and mass play, as well as its existing…

In our view, the main takeaway from Wynn’s July 10 investor day was that the company is set to continue to make sound investments across its Macau and Vegas portfolio, supporting its intact brand intangible advantage (source of its narrow moat). We don’t plan a material change to our $164 fair value estimate for Wynn, which incorporates roughly 5% and 19% average annual sales growth and operating margins (versus 17.8% reported in 2018), respectively, through 2023. We see shares as attractive…

We plan to reduce our $168 Wynn valuation by around a low-single-digit percentage to account for disruption at the company’s Macau Peninsula property, resulting from renovations taking place through 2019, as well as to account for further VIP industry weakness in Las Vegas. Despite the slight reduction in our fair value estimate, we see shares as undervalued
Wynn is set to see a downtick in its Macau gaming revenue share this year, as it renovates its Encore property located on the region’s…

United States

Wynn Resorts, Limited owns and operates luxury hotels and destination casino resorts in Las Vegas, Nevada, Macau, and China. The Company offers amenities such as guest rooms and suites, restaurants, golf course, and an on-site luxury automotive dealership.

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