"With the Macau names having a good day and the SP500 back at a fresh all-time high, I wanted to take the bounce as an opportunity to remove one of our two Macau names so that we can be focused on the one Gaming, Lodging & Leisure Todd Jordan and his team likes the most," writes Hedgeye CEO Keith McCullough. "In addition to Macau strength, I like the “long US Consumer Discretionary” exposure we get through Steve Wynn’s US properties."
Below is a brief excerpt from an institutional research note written by Jordan earlier today:
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"It’s still early but August seems to be on track to grow GGR more than 20% YoY, the 4th consecutive months of said growth. The estimated data seems to match the anecdotal – traffic is busy and the VIP rooms are hopping. Our thesis is that with the Street already anticipating decelerating growth – with Q2 the peak – continued monthly GGR beats will force revenue and EBITDA estimates higher, and provide the catalysts for stock appreciation. Indeed, in the 2010-2014 Macau bull market, the stocks climbed long after growth had peaked early in the cycle. Current valuations are reasonable even on the conservative EBITDA estimates. We think growth continues to be led by VIP in Q3 and WYNN is the major beneficiary of the VIP explosion. We view the recent sell off as a buying opportunity similar to the many sell offs during the 2010-2014 period when GGR mostly exceeded expectations." |
Click here to read our analyst's original report on Wynn Resorts.
