Morgan Stanley Upgrades Wynn Resorts Stock to Overweight with $104 Price Target
On Friday, Morgan Stanley upgraded Wynn Resorts (NASDAQ:WYNN) stock from Equal-weight to Overweight, setting a new price target of $104, up from the previous $97. This adjustment suggests a potential 25% upside to the new 12-month price target. The upgrade is based on a combination of factors that indicate a favorable risk-reward balance and the potential for re-rating.
The firm highlights three main catalysts that could drive the re-rating of Wynn Resorts. Firstly, there is an expectation of greater stability in Las Vegas compared to the overall market. Secondly, details about the growth opportunity in the United Arab Emirates are anticipated to be revealed at an analyst event on October 8. Lastly, the possibility of increased capital return to shareholders is seen as a positive influence.
The valuation of Wynn Resorts is considered attractive, currently trading at around 8 times the Consensus Next Twelve Months (NTM) Enterprise Value/Earnings Before Interest, Taxes, Depreciation, and Amortization (EV/EBITDA) ratio, which is below pre-pandemic averages. Additionally, the U.S. component of the business is trading at roughly 9 times consensus EV/EBITDA, also below historical averages.
Morgan Stanley believes the current discounted valuation presents an opportunity for investors, with the potential for a re-rating in the near future due to upcoming catalysts. Despite recent financial strategy adjustments by Wynn Resorts, including issuing senior notes and securing additional funding, analyst firms Stifel Financial Corp and Deutsche Bank have maintained their Buy ratings on the company's shares.
In other news, Chinese stocks experienced an upswing following Beijing's announcement of substantial stimulus measures, benefiting companies like Alibaba Group, JD.com, and PDD Holdings, as well as commodity-linked stocks in the mining sector. Investors should stay informed about these developments in the financial landscape.
InvestingPro Insights:
- Wynn Resorts has impressive gross profit margins at 69.02% over the last twelve months, with a market capitalization of $10.01 billion and a P/E ratio of 11.75, indicating noteworthy valuation.
- The company's revenue growth of 44.65% over the last twelve months suggests robust operational expansion.
- Wynn Resorts has seen a significant return over the last week, with positive trends in price total return and analysts predicting profitability this year.
In conclusion, the upgrade of Wynn Resorts stock by Morgan Stanley presents an opportunity for investors to consider due to its attractive valuation and potential catalysts. Stay informed about the latest developments in the financial markets to make informed investment decisions.