Wynn Resorts (ticker: WYNN) experienced a boost in its stock price after a series of positive second-quarter earnings. With a year-to-date increase of 23%, the stock jumped 4.5% to $106.07 at the opening bell on Thursday. Throughout June, it traded between $99.53 and $109.54. Earlier this year, 's spoke favorably about Wynn, labeling it as a solid stock pick.
For Q2, the company reported adjusted earnings of 91 cents per share, surpassing analysts' forecast of 64 cents per share. Additionally, revenue hit $1.6 billion, exceeding estimates of $1.54 billion. The impressive earnings were partly attributed to the recovery of Macau post-Covid and strong performances from Wynn's properties in Las Vegas and Boston.
Looking ahead, CEO Craig Billings expressed confidence in Wynn securing a license for its new resort in the United Arab Emirates. The Wynn Al Marjan Island is scheduled to open in early 2027, with the potential to generate annual Ebitda (earnings before interest, taxes, depreciation, and amortization) in the range of $450 million to $600 million.
Joseph Greff, an analyst at J.P. Morgan, reaffirmed his Overweight rating on Wynn shares and provided a target price of $142. Greff believes that Wynn is an attractive mid-cap investment option to capitalize on the ongoing recovery in Macau.
Wynn Resorts' Recovery in Macau Driven by Mainlanders
According to experts, the ongoing recovery in Macau can be attributed to the influx of wealthy mainland Chinese visitors. This surge in tourism has led to higher growth in the premium mass segment, benefitting Wynn Resorts due to their strong presence in this market. As a result, Wynn is expected to gain both market share and improved margins.
Analyst Greff has revised his estimates for EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) from Wynn's Macau properties in the second half of 2023, increasing it by 6%.
During the second quarter, Wynn's Macau properties reported an adjusted EBITDA of $246 million. This represents a significant turnaround from the $90 million loss incurred during the same period in 2022. Moreover, this performance exceeded the FactSet estimate of $225 million, demonstrating a recovery to 72% of pre-Covid 2019 levels.
Wynn's U.S.-based properties are also flourishing, particularly those in Boston and Las Vegas. The Encore Boston Harbor resort had a record-breaking quarter, generating an EBITDA of $69 million - an all-time high. Additionally, its casino's gross gaming revenue reached $193 million, another remarkable achievement.
In Las Vegas, Wynn Las Vegas experienced a notable increase in hotel revenue as it jumped 6% year over year to reach $177.8 million. This figure represents the highest total for a second quarter.
The positive developments for Wynn Resorts highlight the company's strong recovery in both Macau and the U.S., driven by the return of high-spending tourists and an improved economic environment.