Throughout the initial quarter, Wynn Resorts (NASDAQ: WYNN) stock has been performing well, yet its upside from a New York casino and contributions from WynnBET remain distant possibilities, as per one analyst.
In a latest report to customers, Deutsche Bank analyst Carlo Santarelli outlined a bullish case for Wynn shares, citing many catalysts. These incorporate the continuous Macau resurgence, strength in the Las Vegas Strip, impressive results at Encore Boston Harbor, and – in the longer-term – a casino resort venture in Al-Marjan Island, United Arab Emirates (UAE).
Building works on the UAE site began recently, with a planned opening date of sometime in 2027. Santarelli argues investors have not completely evaluated the potential gains of this venue in regards to Wynn shares. It will be the first gaming venue in the Arab world and a multi-billion dollar project, yet Wynn’s financial exposure is diminished due to its minority ownership status.
“From our perspective, the project is well-positioned to produce strong returns,” Santarelli stated, noting a population of 10 million (90 percent of whom are expatriates, thus allowed to gamble), plus 22 million tourists per year, as well as a tax structure comparable to Singapore’s, around 13 percent.
Wynn New York Advantages Could Be Far Off
Partnering with real estate developer Related Cos., Wynn is aiming to establish a casino-hotel in New York City. The companies are eyeing a site at the Hudson Yards, near 11th Avenue. The Las Vegas-based operator is among a number of gaming companies competing for what could very likely be just one downstate permit.
“Although it would be difficult to call WYNN, or anybody else, a favorite in the process for the 3rd downstate license, we believe WYNN has an attractive spot/pitch for the NYC property,” Santarelli remarked.
The analyst added that Wynn could generate 15% return on investment (ROI) from the New York project – assuming it’s awarded a license – but it could be 2024 when New York officials make decisions on the grantees of the three downstate permits.
Bottom line: Clarity on the New York City casino will take time to surface, and it might be even longer before the region could bring upside to Wynn stock, if at all.
Not Much Expected from WynnBET
There are clear catalysts for Wynn stock – some already taking place and others more long-term. Santarelli doesn’t see the operator’s Wynn Interactive unit, also known as WynnBET, as one of them.
“We don’t have high expectations for a day in which Wynn Interactive is a significant value driver of the shares,” wrote the analyst.
The business is trending in the right direction as it lost $99 million last year compared to $267 million in the previous year, but it’s still not profitable at a time when rivals are either already making profits or close to achieving it. The recent launch of online sports betting in Massachusetts could be a catalyst for WynnBet.
“At the very least, we believe the drag on headline results will decrease in the near future, with the potential for an upside surprise should WYNN gain sufficient market share in the Massachusetts OSB market, considering their physical presence in the state, and their retail launch prior to the online launch, which should have assisted with early, and cost-effective, customer acquisition,” concluded Santarelli.
