The slot machines still ring, the dice still fall and tourists still traverse the famed casino-dotted boulevard, but on a sunny February morning, a new era dawned on the Las Vegas Strip — one without casino mogul Steve Wynn at the helm of his global empire.
The iconic businessman resigned Tuesday evening as chairman and CEO of the company he built, Wynn Resorts, amid a storm of sexual harassment allegations against him.
As Wynn’s swift fall from grace reverberated throughout the community, financial analysts scrambled to answer one of the biggest questions: What will happen to Wynn Resorts, which owns and operates four resort-casinos — two in Las Vegas and two in Macau — and is building a fifth outside Boston?
“Most agree that Steve Wynn was an icon of the industry and had really a set of capabilities that were truly special,” said David Katz, an equity analyst for Jefferies.
Wynn Resorts’ stock closed roughly 14 points higher Wednesday on the Nasdaq exchange. But the company’s stock remains down more than 11 percent since the allegations surfaced late last month.
Wall Street analysts on Wednesday painted a mixed portrait of the gaming company’s future. Citi Research analysts, for instance, concluded that it would be “business as usual” for Wynn Resorts under the leadership of Matt Maddox, who has been appointed CEO. Maddox previously served as the company’s president.
“Under the leadership of Steve Wynn, the Wynn Group has built what we believe some of the highest quality casino resorts in the world which are now managed by a team of seasoned management,” the report’s authors wrote. “ As such, we believe the departure of Steve Wynn will have limited impact on the long term prospects of the Wynn Group.”
It’s a stance shared by other investment companies as well. J.P.Morgan upgraded its rating for the gaming company from “neutral” to “overweight,” meaning analysts expect Wynn Resorts’ stock to outperform the average total return of stocks in their coverage universe.
But J.P.Morgan analysts changed the company’s year-end price target to $196 per share — down from $200, which is where the stock was trading before The Wall Street Journal’s bombshell report. They also posed a variety of questions that could affect the company’s financial performance, including the possible elimination of Wynn’s name on properties.
“We think it stays in Macau, but we are less certain in Boston and, to a lesser degree, Las Vegas,” analysts wrote in the report.
Meanwhile, Goldman Sachs projected that Wynn Resorts could maintain its momentum in the short term, but its financial gurus noted the casino magnate’s absence could have long-term implications — namely, the potential loss of future expansion opportunities and degradation of properties if key team members depart the company as well.
Jefferies, an investment banking company, summed up the significance of Wynn’s departure with this title on its company note released Wednesday: “Elvis Has Left the Building.”
“Mr. Wynn’s value to the company is unarguably profound as its chief visionary and diplomat,” Jefferies analysts wrote. “As such, we do not believe the company can grow at the same trajectory nor can it maintain its cutting edge position.”
Katz, an equity analyst who authored the Jefferies report, said the company likely would pursue one of two paths: Continue forward in its current form, albeit perhaps lacking a strategic vision in Wynn’s absence, or field offers to sell the company in whole or in parts.
“Objectively speaking, should they go down a road of starting to field offers, these are world-class trophy assets,” Katz said, referring to the company’s properties.
The quality of the properties, he said, could make selling the company or parts of it the best value in the end.
Adding to the uncertainty: Wynn still has a roughly 12 percent stake in the company, and it’s unclear how that will be unwound. Company officials expect to disclose Wynn’s separation agreement when it’s finalized. That could shed light on the billionaire’s power and influence over the company in the months to come, despite his official resignation.
Wynn, 76, has denied the allegations that he sexually harassed female hotel workers. In his resignation statement, the casino mogul expressed the utmost support for the executives leading the company forward.
“The succession plan laid out by the Board of Directors and which I wholeheartedly endorse now places Matt Maddox in the CEO seat,” he wrote. “With Matt, Wynn Resorts is in good hands. He and his team are well positioned to carry on the plans and vision for the company I created.”
From the Editor