Following Friday’s market close and looking a couple of years into the future, Deutsche Bank analyst Carlo Santarelli raised his price target on Caesars Entertainment from $90 a share to $105. (The stock closed Friday at $50.60.)
“We believe our target multiples are consistent with peer trading multiples, with the Las Vegas exposure providing a premium, given real estate valuations and OpCo asset sale prices,” Santarelli reasoned, adding that he expected 2024 rents and debt to reach eight times cash flow.
The analyst expects no further Caesars asset sales beyond those that have been already announced, including one big-ticket Las Vegas Strip resort, widely reported to be the Flamingo Las Vegas. He sees icasino and sports betting as only minor contributors to enterprise value.
Santarelli stood with his $92-a-share price target for Wynn Resorts, presently trading at $65.70.He noted the company’s 72 percent exposure to Macau, where the entire casino industry brought in only $414 million last month and one satellite casino (not operated by Wynn) recently closed.
Still, Macau is important to Wynn’s valuation, which would have been only $58 per share, even with Wynn Las Vegas, market-dominating Encore Boston, undeveloped land on the Strip (and despite WynnBet’s well-publicized struggles). Santarelli projected 2024 cash flow of $783.7 million for Wynn Las Vegas, $236.8 million for Encore Boston Harbor, and $116.3 million in royalty fees. He kept his powder dry with regard to the volatile Macanese market, projecting cash flows of $457.6 million for Wynn Macau and $584.7 million for newer Wynn Palace.
