Published On: Tue, Oct 14th, 2014

Bank of America Takes Bets Off Wynn Resorts with Downgrade

Wynn Resorts

Analysts at Bank of America/Merrill Lynch downgraded Wynn Resorts (WYNN) from a Buy to a Neutral. Shares of Wynn fell 0.89% in Tuesday’s pre-market trading. The price target was reduced from $210 to $195 because of increasing uncertainty of the future of the gambling in Macau. Wynn Resorts has significant exposure to Macau, a haven for gambling in Asia, since the pastime is not allowed in mainland China. However, the Chinese government has cracked down on gambling even in Macau, which has left many casino companies that saw Macau as a major opportunity outside of Las Vegas with losing bets.

The still rates Wynn as a Buy with a “B” grade because of its earnings per share growth, return on equity and rise in stock price. However, bears could say these data points are in the rear view mirror, and what matters is the reality in Macau. Contrary to popular misconception, analysts on frequently are at odds with Jim Cramer, the site’s owner. While Cramer on his CNBC Mad Money program was bullish on Wynn Resorts for some time, he changed his thesis as it became clear that Macau was not going to be as friendly an atmosphere for gambling and Las Vegas seems to be recovering.

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