Wynn Resorts (WYNN) - Get Report shares were tumbling 6.7% to $125.72 Monday after concerns about the deadly coronavirus led an analyst at Bank of America Global Research to downgrade the casino-resort operator to neutral from buy.
Analyst Shaun Kelley also cut his stock-price target on the Las Vegas company to $150 from $160, telling investors in a research note that "concerns have grown over the past week as fears and headlines regarding the Wuhan coronavirus have spread."
"Understandably, the Macau-focused gaming names have traded off more than the broader market as they are 1) highly exposed to domestic Chinese travel, 2) the timing is concurrent with Chinese New Year," Kelley said.
China has confirmed 81 deaths and 2,700 cases of the virus, but warned that its incubation period could be as long as 14 days, complicating efforts to screen and detect those who may be potentially carrying the virus.
Wynn Resorts has three properties in China.
Kelley said that what is known about the disease, its curability and how it spreads is still limited. But he said the virus appears to be more difficult to combat than expected, especially as it may be contagious during its incubation period.
That's unlike the SARS virus, which first infected humans in southern China in 2002 and eventually resulted in 774 deaths in 17 countries.
SARS, Kelley said had a more direct impact on Hong Kong and Macau, given the outbreak's close proximity to the two cities, whereas Wuhan is about 600 miles away.
"While the situation could stabilize in coming weeks/months," Kelley wrote, "near-term headline risk is significant, there is limited valuation support for (Wynn and Las Vegas Sands (LVS) - Get Report) following the recent runup, and our sense is U.S. investors have yet to capitulate."