Although he stopped short of putting a Buy rating on shares of Wynn Resorts, J.P. Morgan analyst Joseph Greff posted bullish estimates for the company’s overseas performance. These were predicated by hand-over-fist business in Macau.
Based on advance estimates of the second quarter in the Macanese market, Greff projected VIP gaming revenue to end 50 percent higher, while gross gaming revenue (GGR) from table games and slots is guided to a 30 percent increase. Not only does mass-market play now comprise as much as 75 percent of gambling revenue in Macau, it has achieved 85 percent of its pre-pandemic volume.
Given these figures, Greff extrapolates Wynn Macau and Wynn Palace second-quarter GGR of $741 million, net revenue of $763 million, and cash flow of $236 million. The latter figure puts Greff, formerly a Macau skeptic, well ahead of Wall Street consensus, which predicts $198 million in second-quarter cash flow.
Greff warned, “The level of interest in Macau has waned more recently, given sentiment that has tilted more negatively because of China macro/geopolitical-risk considerations and loss of share price momentum.” Those remarks reflect, in part, a continuing chill in U.S.-China relations.
Turning to Las Vegas, Greff stood pat on his predictions, observing that there is “probably more upside than downside risk,” given trends in room revenue and casino win. Wynn continues to prosper at Encore Boston Harbor, where Greff modestly bumped cash-flow projections for the quarter up to $65 million from $61 million.
According to Greff, Wynn Resorts remains “an attractive mid-cap play in the ongoing Macau recovery, which we believe is being discounted at current valuation levels.” He called the current cash-flow multiple (10.6) at which the stock trades to be “reasonable and undemanding.”
Greff concluded, “The lack of positive share price momentum since 1Q23 earnings season is, in our view, a buying opportunity for investors willing to ignore the noise and focus on the Macau GGR recovery.”
