The firm said it reduced its rating on the destination casino resorts developer, owner and operator based on the company's new valuation, which implies a 4% downside from current levels.
Also contributing to Barclay's downgrade is Wynn's large exposure to the shrinking VIP market in China's Macau gaming hub. VIP and high stakes gamblers have been avoiding the Macau casinos after the Chinese government began its anti-corruption crackdown. Revenue in Macau has been declining ever since.
"The company's new casino on Cotai [in Macau], Wynn Palace is scheduled to open in March 2016, but, like the other new builds in the market, could be held up by delays. In Las Vegas, Wynn's exposure to the high-end Baccarat gamer could cause that property to underperform in the near term," Barclays said in an analyst note.
Shares of Wynn Resorts closed at $108.79 on Thursday afternoon.
Separately, TheStreet Ratings team rates WYNN RESORTS LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate WYNN RESORTS LTD (WYNN) a HOLD. The primary factors that have impacted our rating are mixed-some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, feeble growth in the company's earnings per share and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- WYNN, with its decline in revenue, underperformed when compared the industry average of 7.4%. Since the same quarter one year prior, revenues fell by 27.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 37.98% is the gross profit margin for WYNN RESORTS LTD which we consider to be strong. Regardless of WYNN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WYNN's net profit margin of -4.08% significantly underperformed when compared to the industry average.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 44.40%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 119.81% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- WYNN RESORTS LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has managed its earnings and share float. We anticipate this stability to falter in the coming year and, in turn, the company to deliver lower earnings per share than prior full year. During the past fiscal year, WYNN RESORTS LTD's EPS of $7.17 remained unchanged from the prior years' EPS of $7.17. For the next year, the market is expecting a contraction of 43.3% in earnings ($4.07 versus $7.17).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income has significantly decreased by 119.7% when compared to the same quarter one year ago, falling from $226.90 million to -$44.60 million.
- You can view the full analysis from the report here: WYNN Ratings Report