Optimistic Outlook for Wynn Resorts in 2025, According to Deutsche Bank
Wynn Resorts Outlook for 2025
Wynn Resorts, the renowned casino operator, is gearing up for a significant year in 2025, according to Deutsche Bank's latest outlook. The banking giant has issued a bullish forecast for Wynn Resorts stock, with a price target of $118, and a bullish outlook for the company's future.
Promotions have played a smaller role in Wynn's revenue, accounting for 18.6% compared to 26% in 2019. This shift is primarily due to the changing VIP and mass-gaming revenue mix, which would dictate a like-for-like reinvestment rate of 18.3%. The reduced focus on promotions is expected to make Wynn a modest share donor in Macau in 2025.
Deutsche Bank's gaming revenue forecasts for Wynn in 2025 are relatively steady year-over-year but modestly lower (-1.9%). The first quarter of 2025 for Wynn's Las Vegas Strip is projected to be challenging compared to the first quarter of 2024, but the balance of the year is anticipated to be fairly benign.
Capital returns are expected to emerge as a theme for investors in 2025 and beyond for Wynn Resorts. The annual cash flow to Wynn through both management fees and potential dividend distributions could equate to $180 million to $370 million per year.
Wynn Resorts faces limited opportunities in Thailand due to the new Prime Minister's rejection of casinos and gambling reforms, ruling out casino developments there. However, for New York and Texas, while there is no direct information on new Wynn projects, the primary positive influence on Wynn’s geographic expansion portfolio appears tied to its significant developments in the UAE.
The UAE project, which is expected to open in 2027, isn't included in Deutsche Bank's $118 price target for Wynn Resorts. Wynn will own 40% of the joint venture for the UAE project, and the spending on the project is widely expected to be $5.1 billion. The UAE project isn't expected to garner much credit for Wynn Resorts in 2025, unless Macau fundamentals drive momentum in the stock and investors seek ways to justify higher valuations.
Non-gaming revenue is modeled to be lower in 2025 due to softer demand and rooms offline. Revenue per room and hotel room revenue are forecasted to contract in 2025 due to softer demand and renovation work. Wynn Macau is expected to ramp dividends while remaining leverage neutral in 2025.
Some opportunities for Wynn could arise in 2025 that further expand the outlook for the geographic footprint. Deutsche Bank values Wynn's Strip west land bank as a significant part of its $118 price target for Wynn Resorts. The Las Vegas Strip forecast for Wynn is below consensus, but there is potential for it to surprise to the upside.
In conclusion, Wynn Resorts is poised for a transformative year in 2025, with a focus on capital returns, potential expansion in New York and Texas, and the anticipated UAE project. However, challenges remain, particularly in Thailand and the first quarter of the year for the Las Vegas Strip. Investors will be watching closely to see how Wynn navigates these challenges and capitalizes on its opportunities.
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