Earnings season wrapped up last week for Las Vegas operators and despite declines in first-quarter gaming revenue and visitation, casino executives and Wall Street analysts are exercising some guarded optimism.
Wynn Resorts announced its earnings last week, saying it’s delaying its remodel of the Encore Tower until concerns over tariffs and higher costs are addressed. Wynn CEO Craig Billings said business in Las Vegas is holding up well and that slot handle and revenue per room were up over the first quarter of 2024 and group and convention business looked fine. Even the decline from the Super Bowl of 2024 wasn’t as bad as expected.
Jefferies Equities Research reiterated a Buy rating for Wynn shares with a price target of $111, while fine-tuning its estimates for the rest of the year and 2026. The stock closed Friday at $87.93.
“We are updating our estimates to reflect the reported results and management’s commentary. For 2025, we reflect challenging comps in Las Vegas in second through fourth quarters and now expect the company to generate $6.942 billion of revenue and $2.228 billion of adjusted EBITDA versus $7.144 billion and $2.324 billion prior,” said analyst David Katz. “We are also lowering our 2026 estimates slightly to $7.103 billion for revenue and $2.286 billion for adjusted EBITDA vs. $7.319 billion and $2.386 billion prior.”
John DeCree, director of equity research at CBRE, has a $120 price target for Wynn stock. DeCree described Wynn’s earning report as “prudently cautious,” saying management provided an upbeat, but guarded, outlook considering political and economic uncertainty.
“So far, the direct impact from tariffs has been very limited and manageable, mostly related to certain food and beverage costs that are being addressed through alternative sourcing,” DeCree said. “There has been no real change in consumer behavior apart from the well-documented decline in international visitation to the U.S., mainly from Canada and Mexico. Like other Strip operators, this is a relatively small piece of the business for Wynn that can be easily backfilled. The bigger tariff impact comes from Wynn reassessing the timing of $375 million of domestic capex projects, including the Encore Las Vegas room remodel.”
DeCree said for Las Vegas, Wynn reported $223.4 million of adjusted property EBITDA, slightly ahead of consensus. The company faced a $25 million headwind against last year’s Super Bowl comp.
“Excluding the Super Bowl, casino revenue and average daily room rates were up,” DeCree said. “Slot volumes were strong, with handle up 18.8% year-over-year following 13.2% growth in fourth quarter as the company continues to reap the benefits of reinvestment into its high-limit slot business. Looking ahead to April, revenue per room and slot handle are up versus last year and group bookings met expectations.”
DeCree also weighed in on Golden Entertainment and reiterated a Buy rating, while lowering the price target to $33 from $35. It closed Friday at $27.32.
Golden reported a modest beat in the first quarter with adjusted EBITDA of $37.6 million ahead of the consensus estimate for $37 million. The beat came primarily in its Las Vegas area casinos off the Strip with The Strat and tavern businesses mostly in line with expectations, DeCree said.
“While the portfolio remains resilient with the help of operating efficiencies and cost controls, growth has been elusive,” DeCree said. “However, that could change in the second quarter with The Strat trending higher for each month of the quarter.”
The Strat reaped a $3 million EBITDA benefit from the Super Bowl, DeCree said. Excluding that comp, The Strat would have been up year-over-year. Occupancy in the first quarter was down 5%, driven entirely by a 13% decline in occupancy during February, reflecting the Super Bowl comp.
“Looking ahead, trends at The Strat are encouraging, with hotel revenue up in April on higher occupancy and rate,” DeCree said. “May is pacing higher, and June appears to be shaping up ahead of last year as well, although with more limited visibility. In addition, management alluded to opening a new nationally-recognized food and beverage concept to help drive visitation and revenue, and indicated revenue share payments from Atomic Golf have picked up, pointing to some incremental growth potential at the property.”
The shares of Golden remain “uniquely undervalued” for a company with stable free cash flow, owned real estate, and an underleveraged balance sheet, DeCree said.
“However, investors continue to prefer growth over value,” DeCree said. “Although the company has plenty of dry powder, the mergers and acquisitions environment is unfortunately stagnant. The company’s growth profile right now is limited to operating efficiencies, a few new tavern openings, and hopefully a return to organic growth at The Strat, which could be on the horizon. In the long run, scale is critical for efficient growth in the casino business, and we believe mergers and acquisitions is the key to unlocking value at Golden, whether the company is a buyer or seller.”
DeCree believes management will need to assemble a growth story to help cure the valuation disconnect, but appreciates management’s patience and disciplined approach to capital allocation.
“In the interim, the shares are just too cheap at current levels and the buyback strategy should prove value accretive,” DeCree said. “Moreover, the company’s solid balance sheet and resilient business model allows investors to sleep well at night, a valuable benefit given the political volatility governing markets lately.”
