Nomura Securities Cuts Price Target on Wynn Resorts Ltd (WYNN) to $77
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Nomura Securities maintained a Reduce rating on Wynn Resorts Ltd (NASDAQ: WYNN), and cut the price target to $77.00 (from $83.00), following the company's 3Q earnings report. 3Q Macau EBITDA of $177m was well below expectations of ~$200m. Palace’s revenues were in line but a 15.5% margin was well below the typical WYNN opening. Also, Nomura views WYNN’s lack of mass marketing prior to opening as a mistake given fierce competitive dynamics in the market.
Analyst Harry Curtis commented, "WYNN’s 3Q earnings call was a disappointment. The ramp at Palace and cannibalization at WYNN Macau may be challenged for six (and probably 18) months. WYNN’s 2017 EBITDA ests should fall by ~15%-20% as the timing to reach even the low-end of the company’s 4/2016 Investor Day guidance could be 2+ yrs out. Our Reduce rating is appropriate in our view until a path to 10% ROIC at Palace is clearer. We continue to focus on Macau given its majority share of WYNN’s EBITDA."
Shares of Wynn Resorts closed at $96.52 yesterday.
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