Wynn Worth $165 a Share in Buyout, Private Equity Circling, Says Citron Research

On the heels of news that Matt Maddox is moving out of his role as chief executive officer of Wynn Resorts (NASDAQ:WYNN), a research firm says the gaming company is a buyout candidate and worth significantly more in that scenario than what it’s valued at today.

Andrew Left’s Citron Research said in a tweet earlier today that Maddox’s departure is a sign Wynn Resorts could be on the auction block.

The $WYNN CEO transition is the ultimate “tell” (from superstar to banker) that THE crown jewel of Vegas might finally be up for sale,” said Citron in a tweet earlier today.

Assuming that $165 per share estimate proves accurate in a buyout, that values Wynn at a premium of nearly 76 percent to where the stock closed on Nov. 9.

Maddox Departure

The announcement regarding Maddox leaving the gaming company coincided with the operator’s third-quarter earnings report, It was delivered yesterday after the close of the US market.

Management changes often spark speculation in the investment community that something negative is brewing at a company. But analysts don’t see that as being the case with Wynn.

“Anytime there is a sudden change in management, it leads investors to start asking themselves if something is wrong with the company,” said Stifel analyst Steven Wieczynski in a note to clients. “We actually don’t believe that is the case, as we got the sense Mr. Maddox had been pondering his departure for some time now. No matter which way you slice it, we believe the company will remain in good hands with incoming CEO, Craig Billings, who has a robust resume.”

He rates Wynn a “buy” and increased his price target on the stock to $124 from $107. That implies upside of 32 percent from current levels.

List of Credible Suitors for Wynn Likely Short

To be clear, Citron Research is speculating that Wynn could be a takeover target. The company hasn’t confirmed that.

Additionally, aside from the comment about private equity, Citron isn’t naming potential suitors for Wynn in an acquisition scenario. However, that list is likely to be small because $165 a share implies Wynn’s market capitalization would be around $18 billion, up from $10.23 billion today.

Enter private equity. Those asset managers are flush cash and hunting for elephant-type deals. Apollo Global Management (NYSE:APO) and Blackstone (NYSE:BX), both of which currently own Las Vegas Strip venues, are among the names that have the resources to execute a deal for a company like Wynn Resorts. But those firms haven’t confirmed they’re mulling offers.