Sterne Agee has lowered its third-quarter 2010 and forward earnings before interest, taxes, depreciation and amortization (EBITDA) estimates for Wynn Resorts due to signals that Wynn Macau is losing ground to the competition. The brokerage firm’s third-quarter 2010 EBITDA forecast for Wynn Resorts went to US$239.7 million (MOP1.9 billion) from US$262.9 million. Sterne Agee also lowered its calendar 2010 and calendar 2011 EBITDA to US$979.2 million and US$1,028.9 million, respectively, from US$1,011.7 million and US$1,071.0 million. “Our changes reflect lower channel-checked market-share trends for Wynn in Macau”, analyst David Bain wrote in a research note. “Reports from Macau indicate certain Wynn Macau VIP operators have ‘spread their wings’ and are now also operating in competitor facilities, some that may be offering greater than 40 percent revenue share or more than typical credit under a rolling scheme. “We do not expect a knee-jerk reaction from Wynn Macau in terms of operating strategy,” Mr Bain wrote. Meanwhile, “potential near-term catalysts for Wynn include formalized Cotai plans, which we believe will generate a 20 percent plus return as a product unique to the Cotai marketplace, a special dividend to shareholders and/or Japan’s upcoming potential casino gaming legislation, which may heat up in early calendar 2011.”
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