Shares of luxury hotels and casino operator Wynn Resorts (WYNN, Financial) have surged by 6.38% following Morgan Stanley's decision to upgrade the stock's rating from Equal-weight (Hold) to Overweight (Buy). The investment bank also raised its price target from $97 to $104.
Currently, Wynn Resorts (WYNN, Financial) is trading at $96.84, reflecting a positive market response to the ratings upgrade. The company operates high-end casinos and resorts, including properties like Wynn Macau and Encore in Macao, as well as Wynn Las Vegas and Encore in Las Vegas. Recent initiatives include the development of a managed integrated resort in the United Arab Emirates set to open in 2027.
Despite the recent uptick, Wynn Resorts (WYNN, Financial) presents a mixed financial health picture. The stock has a Piotroski F-Score of 8, indicating a healthy financial situation, and a Beneish M-Score of -1.81, suggesting that the company is unlikely to be a manipulator. However, it also has some warning signs, such as an Altman Z-Score of 1.14, which puts it in the distress zone, indicating a potential for bankruptcy within the next two years. Additionally, the company's revenue per share has been in decline over the past five years, and its forward PE ratio being higher than the trailing PE ratio suggests declining earnings.
On the valuation front, Wynn Resorts (WYNN, Financial) has a GF Value of $140.34, which positions the stock as a "Possible Value Trap." The GF Value suggests a substantial premium over the current trading price. For a detailed valuation, refer to the GF Value page.
Wynn Resorts (WYNN, Financial) has demonstrated notable growth metrics, including a 49.6% EBITDA growth over the past year and a 46.1% revenue growth. However, the company still faces challenges, such as a high debt-to-EBITDA ratio of 6.55 and warnings related to insider selling activities. The company's Altman Z-Score and revenue per share decline are other factors to consider for potential investors.
While the stock's recent performance and the upgrade may appeal to investors, it is crucial to note the underlying financial risks. Investors should weigh both the positive indicators and the red flags before making an investment decision in Wynn Resorts (WYNN, Financial).
