Wynn Resorts, Limited WYNN purchased 38 acres of land on the Las Vegas Strip directly across from the Wynn Las Vegas Resort. At least one Wall Street analyst sees the move as good news for Wynn investors.
The Analyst
Barclays analyst Felicia Hendrix has a Neutral rating and $180 price target for Wynn.
The Thesis
Wynn is forking over a whopping $336 million for the property, which is the site of the former New Frontier casino. According to Hendrix, it’s a good move to snatch up the land considering Strip real estate is sparse.
“When taken into consideration with WYNN’s proposed $500mn Phase I Paradise Park development on the site of the former Wynn Golf Course, today’s announcement offers WYNN a rich set of options in terms of future development and the timing of any future projects,” Hendrix said in a Thursday note.
The $336 million price tag represents a 20 percent premium to the price Crown Resorts paid for the property, and the $8.8 million-per-acre rate is certainly steep. However, Hendrix says the move gives Wynn a unique flexibility in the future when the company decides its long-term strategy in Las Vegas.
Construction on the Las Vegas Strip has been relatively modest in recent years compared to the explosion of casino mega resorts in Macau, China. Wynn opened the massive $4 billion Wynn Palace on the Cotai Strip in Macau in August of 2016.
Price Action
Wynn stock has certainly benefitted from a huge recovery in the Macau gambling market in 2017. The stock is up 92.1 percent year-to-date.
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