Flutter, Wynn Resorts Get Boosts From Analysts as US Gaming Strengthens

Article by : Erik Gibbs Feb 6, 2024

• 
• 

In a statement dated February 2, Jefferies analyst David Katz highlighted the heightened interest among investors in Flutter’s listing on the New York Stock Exchange.

Katz observed that management has adeptly balanced the business by leveraging global assets and expertise while embracing decentralized execution, a strategy contributing to FanDuel’s leadership.

Despite technical disruptions, Katz anticipates a potential valuation upside. Attention also lingers on Entain and MGM, with investors anticipating an eventual transaction due to BetMGM’s underperformance in the existing structure.

Katz maintains support for MGM to acquire the outstanding stake of BetMGM or the entirety of Entain, subject to favorable terms.

In a note dated January 31 regarding Wynn Resorts, J. P. Morgan analyst Joseph Greff adjusted the 4th quarter 2023 Macau property-level EBITDA estimate to $291 million, up from the previous $278 million.

This new estimate stands 6% above the Street’s projection of $275 million. Greff emphasizes that this adjustment isn’t a best-case scenario, and with a GGR market share consistent with the 3rd quarter of 2023 (14%), Wynn Macau’s GGR could be higher.

Despite modest margins on a q/q basis (70 basis points below Las Vegas Strip’s 100 basis points achieved in the 4th quarter), Greff believes this is conservative, considering a sequential uptick in higher-margin retail revenues.

Shifting focus to Las Vegas, the analyst raised the 4th quarter 2023 property-level EBITDA estimate to $240 million, surpassing the prior estimate of $229 million by 6%, which also exceeds consensus.

Greff attributes this change to the belief that the luxury segment in Las Vegas, especially after the F1 event in November, is the best-performing tier in the market, gaining significant benefits compared to its Las Vegas Strip peers.

Fitch Ratings has entered the discussion on Wynn Resorts, offering a maiden ‘BB-‘ Issuer Default Rating for all Wynn Resorts holdings.

Specifically, Fitch designated a ‘BB+’/’RR1’ for Wynn’s first-lien secured debt and a ‘BB-‘/’RR4’ for the unsecured debt of Wynn. The Rating Outlook has been deemed Stable.

The assigned ratings reflect the esteemed quality of Wynn Resorts’ gaming assets, anticipating a positive shift in Macau’s gaming market with increased visitation and gaming activity, contributing to enhanced credit metrics.

Strong performance in Las Vegas and a robust liquidity position, supporting ongoing capital projects and potential debt reduction, further underpin the ratings.

However, Fitch acknowledges the moderate diversification of the company, despite its presence in two major gaming markets globally, and highlights the capital demands associated with current and potential projects, potentially influencing the pace of substantial credit improvement.