U.S. casinos with operations in Macau are taking a hit in the stock market this morning on stiffer regulations and a new wave of the Coronavirus in the region.
Shares of Wynn Resorts Limited (NASDAQ: WYNN) are down about 13% today, but Cerity Partners’ Jim Lebenthal only saw it as an opportunity to add to his long position in WYNN.
Highlights from Lebenthal’s interview with CNBC
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Lebenthal originally hopped onto the stock last week. Defending his stance on CNBC’s “Halftime Report”, he said Macau was not the primary source of earnings for Wynn.
“60% of the last six-month EBITDA came from outside of Macau,” Lebenthal noted.
He expects the company’s digital segment, Wynn Interactive, to be a notable driver of growth in the future. Earlier this year in May, Wynn Resorts said it will spin off this mobile gaming and sportsbook business into an independent, publicly-traded company via a SPAC merger with Bill Foley’s Austerlitz Acquisition Corporation I.
Lebenthal acknowledged that WYNN was a risky trade considering the ongoing Chinese crackdown but said:
“These risks are ones that you have to accept if you’re going to buy a stock that has the potential to return 30% in six months. Wynn has the worst case priced into it, but it’s highly unlikely to come.”
Hightower’s Stephanie Link agrees
During the same interview, Hightower’s Stephanie Link, who also owns the stock, agreed with Lebenthal’s thesis and said she would also buy more, when she can.
“They’re doing what they can until you see Macau recover. In the meantime, Las Vegas and Boston are 30% of revenue. Online gaming is still small, but it’s a $45 billion total addressable market, and they have a 58% spec share. So, there’s a lot of ways this company can win,” she added.
Peer Las Vegas Sands is also down about 13% on Tuesday.
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