Published on: January 6, 2025, 12:15h.
Last updated on: January 6, 2025, 12:29h.
After a challenging year in 2024 where the stock of Wynn Resorts (NASDAQ: WYNN) declined more than 5%, trailing the market significantly, there is now positive sentiment on Wall Street regarding the potential redemption of Wynn Resorts as a casino stock in 2025.
In a recent report on gaming and leisure equities, Stifel analyst Steven Wieczynski identified Wynn as the top large-cap casino pick for 2025, reiterating a “buy” rating and a $123 price target, representing a potential 46% upside from the closing price on January 3. Wynn’s focus on Macau, where it operates two integrated resorts, positions it well for potential growth, especially as the gaming revenue in Macau increased despite challenges faced by gaming stocks in the region.
We think Macau’s fundamentals should continue to improve on accessibility improvements & consumer sentiment, and forecast market-wide GGR growth in the range of 4% to 10% for 2025, in line with the consensus estimate,” noted Wieczynski.
Wieczynski also highlighted that despite challenges, Macau’s gaming revenue is expected to grow, with potential opportunities for further stimulus by China not currently reflected in the stock prices.
Wynn’s Strong Reputation Could Drive Growth
Whether in Las Vegas or Macau, Wynn is known for its high-quality casino hotels that attract affluent customers.
In Macau, this is advantageous as high-end customers are less affected by economic fluctuations compared to mass-market players. Additionally, Wynn Macau’s clientele is less reliant on economic stimulus from the People’s Bank of China, providing a stable revenue base.
In Las Vegas, Wynn, like its competitors, may face challenges in the first part of the year due to tough year-over-year comparisons, but the situation is expected to improve in the latter part of 2025, potentially driving growth for the casino stock.
“The Strip’s draw as a premier global sports and entertainment destination is only becoming more powerful, and WYNN’s asset quality remains unmatched at the high end of the market, where demand is most resilient, in our view,” added Wieczynski. “The company also has a substantial land bank of prime Strip real estate that provides optionality for further development down the road.”
Upcoming UAE Project Could Benefit Wynn
With Wynn Al Marjan Island expected to open in the next two years and the hotel tower reaching completion by the end of 2025, the first casino resort project in the Arab world could boost Wynn’s stock as the year progresses.
Wieczynski highlighted that the UAE project is an undervalued aspect of Wynn’s investment potential and the joint venture could add significant value to the share price.
“Overall, we believe that a shift in sentiment and improving market conditions in Macau should lead to a reevaluation of WYNN shares in the medium term, while the strong cash flow from the Las Vegas operations provides a solid foundation for future growth opportunities in the pipeline,” concluded the analyst.