On Thursday, CFRA made a notable adjustment to its stance on Wynn Resorts (NASDAQ:WYNN), downgrading the company's stock rating from Buy to Hold. Concurrently, the firm reduced the price target for Wynn Resorts to $100 from the previous $110. This decision reflects a new valuation based on a multiple of 10.6 times the firm's projected 2024 adjusted EBITDA, aligning with Wynn Resorts' one-year average forward EV/EBITDA multiple of 10.5x.
The change in rating comes even as CFRA raised its 2024 earnings per share (EPS) estimate for Wynn Resorts by $0.25 to $3.50 and introduced a 2025 EPS estimate of $4.00. This follows Wynn Resorts' reported normalized earnings for the fourth quarter, which showed a significant turnaround with EPS of $1.91 compared to a loss of ($1.23) in the prior year. This figure surpassed consensus estimates by $0.75. The company's revenues came in at $1.84 billion against projections of $1.00 billion, exceeding estimates by $102 million.
Wynn Resorts' performance varied across its properties. Las Vegas revenues saw a year-over-year increase of 19% to $697 million. In contrast, Boston revenues saw a marginal decline to $217 million. The Macau properties, however, showed a strong resurgence, with Wynn Macau (OTC:WYNMF) revenues jumping from $77 million to $386 million, and Wynn Palace revenues increasing from $113 million to $524 million.
The company's adjusted property EBITDAR for the fourth quarter climbed by $435 million to reach $630 million, largely due to the strong recovery in its Macau locations. In addition, Wynn Resorts declared a quarterly cash dividend of $0.25.
Despite these positive indicators, CFRA believes that Wynn Resorts' stock is trading near fair value and that the market has already priced in the potential for another robust year from its Macau operations. However, concerns remain regarding the company's high debt level, which stands at $11.7 billion, and an interest expense that continues to impact earnings negatively.
InvestingPro Insights
Following CFRA's recent repositioning on Wynn Resorts (NASDAQ:WYNN), insights from InvestingPro provide a deeper understanding of the company's financial health and market performance. According to InvestingPro data, Wynn Resorts boasts a market capitalization of $11.19 billion and is trading at a Price to Earnings (P/E) ratio of 15.8. Notably, the company's revenue has seen a substantial growth of 50.14% over the last twelve months as of Q3 2023.
InvestingPro Tips highlight that analysts are optimistic about Wynn Resorts' financial trajectory. They expect net income to grow this year, with sales also anticipated to rise. This aligns with the company's recent performance, which includes a significant gross profit margin of 63.77% over the same period. Moreover, it's worth noting that five analysts have revised their earnings estimates upwards for the upcoming period, suggesting confidence in Wynn Resorts' earning potential.
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