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Casinos/Wynn Resorts Ltd. (WYNN) Free Fall Continuing

Mar 06 2009

Casinos/Wynn Resorts Ltd. (WYNN) Free Fall Continuing

With a world-wide economic recession continuing, the major casino operators in both Las Vegas and Macau, China are seeing slowing traffic and decreasing profits. The stocks of casino operators Wynn Resorts (WYNN), Las Vegas Sands (LVS), and MGM Mirage (MGM) all fell Friday. MGM fell 1.5% midway through the afternoon with Las Vegas Sands falling 14% and Wynn Resorts tumbling 8%.

Analyst Lower's Targets

Dennis Frost of KeyBanc Capital Markets lowered targets for Wynn Resorts on Wednesday including the company's first quarter profit estimate, second, third, fourth, and full year estimates. He also lowered the price target for the stock from $18 a share down to $13 a share. Earnings estimates were decreased from 17 cents a share in the first quarter down to 6 cents a share. Second quarter earnings per share estimates were cut from 33 cents to 27 cents.

Fundamentals

The company missed it's fourth quarter 2008 estimate by 84%, earning only 7 cents a share. Earnings growth is estimated to be falling at 82% for the year while revenues will hopefully increase 2%. The forward price/earnings ratio remains at 18 even after the stock reaches a new 52 week low daily. Most operators are cutting jobs, canceling or suspending projects, and reducing costs to regain profitability. In this tough environment, Wynn Resorts will continue to struggle.

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