Posted on: January 6, 2025, 12:15h.
Last updated on: January 6, 2025, 12:15h.
Following a rough 2024 in which the stock lost more than 5%, badly trailing the broader market along the way, Wynn Resorts (NASDAQ: WYNN) is earning some appreciation on Wall Street as some analysts view it as a 2025 casino stock redemption story.
In a new report on gaming and leisure equities, Stifel analyst Steven Wieczynski name Wynn as the firm’s top large-cap casino pick for 2025 while reiterating a “buy” and a $123 price target on the shares. That implies upside of 46% from the Jan. 3 close. Wynn is often viewed through lens of Macau where it operates two integrated resorts and while gaming stocks there disappointed last year, gross gaming revenue (GGR) increased and analysts believe companies with exposure to the casino enclave are deeply undervalued today.
We think Macau’s fundamentals should continue to improve on accessibility improvements & consumer sentiment, and forecast market-wide GGR growth in the range of 4% to 10% for 2025, in line with the consensus estimate,” observed Wieczynski.
The analyst added that Macau GGR is likely to remain below pre-coronavirus pandemic levels this year, but it’s still poised to grow and that forecasts on Macau gaming stocks, including Wynn, aren’t currently pricing in the possibility of more monetary stimulus by China.
High-End Reputation Could Make Wynn Casino Stock Winner
Whether it’s in Las Vegas or Macau, Wynn has a long-standing reputation for operating top-tier casino hotels that attract affluent patrons.
In Macau, that’s advantageous because big spenders and VIPs are less sensitive to gyrations in the Chinese economy than are mass market players. This year, some Macau operators could be reliant on the People’s Bank of China (PBOC) delivering more economic stimulus, but Wynn Macau is less dependent on that scenario due to its affluent client base.
In its home market of Las Vegas, Wynn, as is the case with competitors, is likely to face difficult year-over-year comparisons in the first half of this year, but that situation should abate in the back half of 2025, potentially setting up the casino stock for some upside.
“The Strip’s draw as a premier global sports and entertainment destination is only becoming more powerful, and WYNN’s asset quality remains unmatched at the high end of the market, where demand is most resilient, in our view,” adds Wieczynski. “The company also has a substantial land bank of prime Strip real estate that provides optionality for further development down the road.”
UAE Casino Could Boost Wynn Stock
With Wynn Al Marjan Island slated to open in about two years and the hotel tower on the project scheduled to be topped off by then end of 2025, the first casino resort project in the history of the Arab world could galvanize shares of Wynn as this year moves along.
Wieczynski noted the United Arab Emirates (UAE) project is an underappreciated part of the broader Wynn investment thesis and the joint venture could be worth $10 to $17 to the share price.
“Putting it all together, we believe a sentiment shift and improving market fundamentals in Macau should ultimately warrant a re-rating for WYNN shares over the medium term, while the Las Vegas operations provide a sturdy base of free cash flow generation to fund long-term opportunities in the growth pipeline,” concluded the analyst.
