Possible Palace Mass Market Gains Lead Aegis To Boost Estimates On Wynn

Aegis Capital has upped its Q1 EBITDA estimates for Wynn Resorts, Limited WYNN from $353.9 million to $359.7 million in light of the firm’s increasingly optimistic forecast for mass market revenue growth in Macau.

“While VIP tailwinds continue to underpin the potential for forward upward revisions, our revised Wynn Palace mass revenue assumption is the primary driver of our increased 1Q17 estimate,” analyst David Bain explained. According to Bain, Wynn Palace will increase its mass market share to 5.9 percent, up 0.5 percent from Q4.

4 Drivers

Bain sees four drivers of Wynn’s mass market share gains:

1. The addition of new host teams to increase premium mass revenue.
2. Less Light Rail construction traffic disruptions.
3. New bus additions as well as joining the Cotai Connection program.
4. Reorganization of the casino floor and other design implementations.

Returning VIP gamblers have been a string tailwind for Wynn in 2017. Bain estimates that roughly 60 percent of Wynn Palace’s gross gaming revenue comes from VIP gamblers, more than the 49 percent VIP share for MGM Resorts International MGM’s properties, the 32 percent share for Las Vegas Sands Corp. LVS properties and the 39 percent share for Melco Resorts & Entertainment Ltd(ADR) MLCO’s City of Dreams.

Aegis maintains Buy ratings for Wynn, Las Vegas Sands and MGM.

Disclosure: The author is long MLCO.

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