Wynn Resorts shares rebound after analysts downgrade stock
Shares of Wynn Resorts Ltd. rebounded Wednesday from their low of about $108 in active premarket trading following decisions by analysts to downgrade the company's stock.
Wynn Resorts' shares opened down 3.35 percent to $108.80, from their Tuesday close of $112.57. The company's stock closed Wednesday down $1.43, or 1.27 percent, to $111.14 on heavy volume of 5 million shares traded on the Nasdaq National Market.
The downgrade by analysts came less than 24 hours after the casino operator reported a loss of $22.5 million, or 27 cents per share, for the third quarter, compared with a profit of $34.2 million, or 28 cents a share, a year earlier.
"With little on the growth horizon in the intermediate term ... and the unclear timing of a true Las Vegas recovery, we see few catalysts not yet priced-in to pull valuation higher than current levels," Sterne Agee research analyst David Bain said.
In a note to clients, Bain downgraded Wynn Resorts to "neutral" from "buy." His target price for Wynn Resorts shares was $109.
He said that with a struggling consumer environment and the Cosmopolitan of Las Vegas opening Dec. 15, Las Vegas at this point can't be considered a catalyst for Wynn Resorts.
Hudson Securities analyst Robert Shore, meanwhile, downgraded Wynn Resorts to "hold" from "buy." Shore raised his target price to $121 from $110.
"Despite good results and an encouraging outlook, we are dropping our rating," Shore and his colleague Robert LaFleur wrote in a research report. "The stock has had a great run and we would need to stretch our estimates and/or target multiples to levels which we are uncomfortable with in order to maintain the 'buy.' "
LaFleur, the primary analyst with Hudson Securities, said Wynn Resorts remains a great story with the best balance sheet in the gaming industry.
"We just can't get to numbers and multiples that get us enough upside to keep the 'buy' rating," LaFleur said. "On a pullback, we'd definitely look to get more aggressive on the name."
Contact reporter Chris Sieroty
at csieroty@reviewjournal.com or 702-477-3893.
