"High operating leverage" expected for the future
Morgan Stanley: don't underestimate Wynn Palace Macau potential
Despite earnings initially falling short of expectations, the market may be underestimating the potential of the US$4.3bn Wynn Palace in Macau, Morgan Stanley said.
2016-10-25
Reading time 29 seg
Despite earnings initially falling short of expectations, the market may be underestimating the potential of the US$4.3bn Wynn Palace in Macau, Morgan Stanley said.
“The opening of Wynn Palace has been disappointing, and consensus may revise down EBITDA expectations for 2017,” Morgan Stanley analysts said in a note.
“However, we believe that as this is priced into Q3 2016 results, we see a buying opportunity emerging for the stock, especially for longer-term investors.
“We expect consensus to revise down its 2016/17 earnings, but this could reverse in future due to high operating leverage, resumption of market mass revenue growth and rectification of initial operational issues.”
The analyst said it expects Wynn Macau EBITDA to grow from $676m in 2016 to $961m in 2018.
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