Wynn Stock ‘Seems Crazy’ As It Assigns Nearly No Value for Macau, UAE

Shares of Wynn Resorts (NASDAQ: WYNN) are off 18% year-to-date while the S&P 500 is hovering around a double-digit gain as investors fret about the gaming company’s United Arab Emirates (UAE) project and weakness in Macau.

Describing the situation as “somewhat crazy under any scenario,” Stifel analyst Steven Wieczynski says the current anomalies with Wynn stock imply market participants are assigning “almost zero value” for the Wynn Macau business and the UAE endeavor.

He has a “buy” rating on Wynn stock with a $140 price target, implying potential upside of 42.1% from current levels.

What’s Ailing Wynn Stock

Understanding what’s plaguing Wynn stock this year isn’t difficult. In Macau – a market that accounts for a substantial portion of the operator’s revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) – gross gaming revenue (GGR) is slack and promotional activity is elevated.

Compounding the issue of Macau GGR compression is the fact the World Cup, which is drawing to a close, is pressuring casino betting appetite and the issue of many recent visitors to the gaming enclave not indulging in betting. Said another way, Macau concessionaires, including Wynn, are grappling with solid visitation numbers not panning out in the form of GGR growth.

The situation involving Wynn Al Marjan Island, the $5.1 billion casino resort, is equally easy to comprehend. That integrated resort isn’t yet open (it’s scheduled to debut in 2027) and while it could live up to Wall Street expectations as a long-term growth driver for Wynn, the project is exposing vulnerabilities in the stock due to the war in Iran.

The analyst estimates the UAE project alone is worth $19 to $25 to Wynn’s share price.

Here’s Why Wynn Stock Is Undervalued

Wieczynski lays out a sum of the parts analysis to support the case for Wynn stock being viewed as inexpensive at around $98, or where it trades at this writing.

The analyst estimates the company’s Las Vegas properties are worth $45 to the share price with another $7 derived from Encore Boston Harbor and a $3 per share contribution from Wynn’s untapped Las Vegas land. Call the UAE contribution $20 a share, add it all up and that’s $75. Throw in an estimated $11 in Wynn Macau royalties and that’s $86.

“We don’t care what kind of environment you want to price into Macau, but there is no way you can say their Macau assets are only worth ~$10/share,” concludes the analyst. “That just doesn’t make sense to us. And even if you think we are way too aggressive with our UAE assumptions, then we are probably undervaluing their Macau assets. Either way you think about it, either the market is undervaluing their Macau or UAE assets.”