Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
Flutter
In a Feb. 2 statement, Jefferies analyst David Katz noted that investors were “particularly engaged” by the listing of Flutter on the New York Stock Exchange.
“Our take is that management has thoughtfully balanced the business between its global assets/expertise and decentralized execution, which is driving FanDuel’s leadership,” Katz wrote. “Notwithstanding technical dislocation, we expect valuation upside. As for Entain and MGM, investors remain focused on an eventual transaction of some sort, given the underperformance of BetMGM in the current structure. We remain supportive of MGM acquiring the outstanding stake of BetMGM or the whole of Entain, pending terms.
Wynn Resorts
J. P. Morgan analyst Joseph Greff, in a Jan. 31 note on Wynn Resorts, wrote, “We are bumping our 4th quarter 2023 Macau property-level EBITDA estimate to $291 million from our prior $278 million estimate, which is 6% above the Street’s $275 million. We don’t think this is a best-case scenario. If we were to assume GGR market share consistent with the 3rd quarter 2023 of 14%, then our Wynn Macau GGR would be higher; as well, we have margins up just modestly on a q/q basis (70 basis points below Las Vegas Strip’s 100 basis points that it achieved in the 4th quarter), which is similarly conservative given a sequential uptick in higher margin retail revenues.
“In Las Vegas, we up our 4th quarter 2023 property-level EBITDA estimate to $240 million from our prior $229 million estimate, which is 6% above consensus. Our estimate change is underpinned by our belief that the luxury segment in Las Vegas is the best performing tier in that market and likely benefitted the most versus its Las Vegas Strip peers from the F1 in November (which now feels so long ago).”
Fitch Ratings also weighed in on Wynn Resorts, assigning a first-time ‘BB-‘ Issuer Default Rating to all Wynn Resorts holdings. Fitch assigned a ‘BB+’/’RR1’ to all first-lien secured debt of Wynn and a ‘BB-‘/’RR4’ to all unsecured debt of Wynn. The Rating Outlook is Stable.
“The ratings reflect the high-quality portfolio of its gaming assets, the expected improvement in Macau’s gaming market in terms of visitation and gaming activity that is expected to drive further improvement in credit metrics, strong results in Las Vegas, and robust liquidity that should fund near-term capital projects and could lead to further debt reduction,” Fitch posted in a statement. “This is somewhat offset by the company’s average diversification, although it operates in two of the largest gaming markets in the world, and the capital required to fund current and potential capital projects, which could affect the pace of more meaningful credit improvement.”
