Goldman Sachs Conviction Buy Propels Wynn to Four-Year High on Macau Recovery

Goldman Sachs Conviction Buy Propels Wynn to Four-Year High on Macau Recovery#

WYNN Resorts surged 3.3 percent to close at $132.95 on December 1 after Goldman Sachs added the casino operator to its Conviction Buy list with a $145 price target, marking a dramatic reversal from the bearish analyst sentiment that dominated just three weeks earlier. The upgrade arrives on the heels of operational data that fundamentally contradicts the overvaluation narrative articulated in mid-November, when a prominent analyst assigned a $104.70 downside target based on third-quarter losses and extreme valuation multiples. The intervening twenty days, however, brought a cascade of earnings revisions and regional gaming data that compel institutional investors to reassess whether WYNN represents a timing misjudgment rather than a structural overvaluation.

The stock trades within striking distance of its October 2 four-year high of $134.23, having climbed 55 percent year-to-date through a combination of domestic margin expansion and the gradual restoration of confidence in Macau's mass-market gaming recovery. Goldman's rationale centers on three interrelated dynamics: the company's best-in-class Las Vegas assets achieving all-time profitability records, an improving backdrop in Macau where October gaming revenue hit the highest monthly total since 2019, and the approaching 2027 opening of Wynn Al Marjan Island in the UAE. The firm explicitly frames the investment opportunity as "transformative upside," language that stands in sharp contrast to the leverage and consumer-weakness concerns that shaped prior coverage.

The Profitability Inflection#

Third-quarter results released in early November reveal that WYNN generated $88.3 million in net income attributable to shareholders for the quarter ending September 30, 2025—a stark reversal from the $32.1 million net loss recorded in the same quarter of 2024. Total operating revenues reached $1.83 billion, an increase of $140.4 million year-over-year, driven by strength across both domestic and international properties. The profitability restoration undermines the loss-focused narrative that informed earlier downgrade theses and shifts the valuation debate from whether the company can sustain operations under its debt load to whether the market has adequately priced the earnings trajectory implied by continued operational momentum.

Macau operations emerged as the standout performer, with regional revenues climbing 14.8 percent year-over-year and 13.4 percent quarter-over-quarter to $1.01 billion. Adjusted Property EBITDA in Macau rose to $308 million, up from $254 million in the second quarter and $263 million in the third quarter of 2024, reflecting both volume gains in mass-market gaming and the normalization of VIP table game hold rates. Wynn Palace specifically posted revenue of $635.5 million, a 22.3 percent year-over-year increase that signals market share gains within a recovering regional ecosystem. CEO Craig Billings noted during the quarterly call that mass gaming volumes "remained strong through October and early November," providing forward visibility that extends beyond the reported quarter and aligns with broader Macau trends documented by regulatory authorities.

Macau Six-Year High Context#

Macau's October gaming revenue totaled MOP 24.09 billion, equivalent to approximately $3.01 billion, marking a 15.9 percent year-over-year increase and the highest monthly total since October 2019. The figure surpassed the previous post-pandemic record of MOP 22.16 billion set in August 2025 and benefited from robust Golden Week performance, with the first five days of October generating MOP 5.5 billion—the strongest five-day stretch in more than five years according to JP Morgan research. November data released on December 1 showed gross gaming revenue of MOP 21.09 billion, up 14.4 percent year-over-year despite a 12.45 percent sequential decline attributable to calendar effects and fewer VIP-focused events. The sustained double-digit growth represents the tenth consecutive month of year-over-year gains and positions the region to exceed the government's revised full-year forecast of MOP 228 billion.

Premium mass gaming, the segment most aligned with WYNN's operational focus, experienced a 19 percent increase in betting volume during November despite disruptions from the National Games and Macau Grand Prix events. The strength in premium mass is particularly relevant for valuation purposes because it offers higher margins than VIP junket business and exhibits less volatility in hold rates, reducing the quarterly earnings swings that have historically complicated investor sentiment. Macau's year-to-date gross gaming revenue through November reached MOP 226.52 billion, up 8.6 percent compared to the same eleven-month period in 2024, underscoring the durability of the recovery trajectory and mitigating concerns about a temporary demand spike driven by pent-up travel.

The Data That Changed the Narrative#

The third-quarter earnings release and subsequent October gaming data from Macau provide the factual foundation for Goldman's upgrade, effectively resetting the inputs that drive discounted cash flow and comparable company analyses. The November 12 bearish assessment rested on the premise that WYNN was trading at an unsustainable 64 times EV-to-EBITDA on an annualized Q3 basis, a multiple that implied either explosive near-term growth or a significant repricing downward. The revised Q3 2025 data—$88.3 million in net income versus the prior year's loss—alters the denominator in valuation ratios and shifts the debate from whether the company can return to profitability to whether current multiples adequately capture the earning power implied by a full recovery in Macau and sustained Las Vegas outperformance.

Earnings Reversal Detail#

The $120.4 million year-over-year swing in net income from a $32.1 million loss to an $88.3 million profit reflects both revenue growth and operational efficiency improvements that management has pursued throughout 2025. Las Vegas operations contributed meaningfully, with the property posting an all-time monthly EBITDA record in August and management commentary indicating that the fourth quarter began on a strong footing. Group bookings for 2026 are pacing ahead of the prior year, suggesting that corporate travel and convention demand—critical to Las Vegas property profitability—has recovered to levels that support premium pricing and high occupancy simultaneously. This domestic strength matters because it demonstrates that the investment thesis does not rest solely on the uncertain trajectory of Macau's regulatory environment or Chinese consumer spending patterns.

Macau's contribution to the earnings reversal is equally material. The region generated $308 million in adjusted property EBITDA during the third quarter, representing a 17.1 percent increase from the prior year and a 21.3 percent increase from the second quarter of 2025. The sequential improvement is particularly telling because it captures the impact of Golden Week and the normalization of hold rates following an unfavorable second quarter that saw VIP win percentages fall below expected ranges. Wynn Palace's 22.3 percent revenue growth year-over-year outpaced the broader Macau market, indicating that WYNN's premium positioning and property quality are translating into market share gains as the region's recovery matures. This dynamic supports the argument that the company will disproportionately benefit from continued improvement in Macau rather than simply riding a rising tide.

Regional Performance Breakdown#

Las Vegas delivered $638.6 million in operating revenues during the second quarter of 2025—the most recent discrete data point available before the third-quarter call—with adjusted property EBITDA of $234.8 million representing a 36.8 percent margin. That margin ranks among the highest in the domestic gaming sector and reflects both operational discipline and the property's ability to command premium rates across casino, hotel, and food-and-beverage segments. The all-time August EBITDA record mentioned by management suggests that third-quarter Las Vegas performance likely matched or exceeded second-quarter results, providing incremental support for the thesis that domestic operations can offset any near-term volatility in Macau. The strong 2026 group booking pace further de-risks the Las Vegas outlook, as group business typically carries higher margins and more predictable revenue than transient leisure demand.

Macau's third-quarter performance breakdown shows Wynn Palace generating $635.5 million in revenue, up 22.3 percent year-over-year, while Wynn Macau—the company's older Macau property—contributed the balance of the region's $1.01 billion total. The disparity in growth rates between the two properties suggests that Wynn Palace's Cotai location and premium amenities are resonating with the mass-market and premium-mass segments that now dominate Macau's revenue mix. Importantly, management noted that mass gaming volumes remained strong into November, a comment that implies the third-quarter strength was not an artifact of temporary factors like favorable hold rates or calendar effects but rather reflects genuine demand recovery. This forward-looking commentary provides institutional investors with confidence that fourth-quarter Macau results will sustain the trajectory established in the third quarter.

Goldman's $145 Thesis vs. Prior $104 Downgrade#

Goldman Sachs' $145 price target implies approximately 9 percent upside from the December 1 closing price of $132.95 and a 38 percent premium to the $104.70 downside target articulated in mid-November by a SeekingAlpha analyst who viewed the stock as overvalued. The divergence in views reflects fundamentally different assumptions about the sustainability of WYNN's earnings trajectory, the appropriate valuation framework for a leveraged operator with significant growth capex commitments, and the probability that Macau's recovery will continue rather than stall. Goldman's conviction buy designation—reserved for high-conviction ideas within the firm's coverage universe—signals that the upgrade is not a marginal call but rather reflects a view that the market is materially mispricing the stock relative to its intrinsic value.

The bearish case articulated in November rested on three pillars: unsustainable valuation multiples (64 times EV-to-EBITDA on an annualized Q3 basis), leverage profile risks given $11 billion in net debt and negative shareholder equity, and consumer weakness signals such as the 12 percent year-over-year decline in Las Vegas tourist spending reported for July 2025. Each of these concerns remains factually accurate in isolation, but the updated earnings data and Macau recovery trajectory alter the relative weighting investors should assign to near-term leverage metrics versus medium-term earnings power. If WYNN can sustain quarterly EBITDA in the range of $550 million—roughly in line with second- and third-quarter 2025 results—the company generates approximately $2.2 billion in annual EBITDA, implying an EV-to-EBITDA multiple closer to 20 times than 64 times when using a more normalized run rate rather than a single weak quarter.

Valuation Framework Reconciliation#

The 64 times EV-to-EBITDA multiple cited in the November downgrade likely reflected annualized third-quarter 2024 EBITDA—a period when the company posted a net loss and Macau results were depressed by regulatory uncertainty and weak VIP hold. Applying that multiple to third-quarter 2025 EBITDA would yield a materially different valuation, underscoring how sensitive levered gaming operators are to the choice of base period for annualization. Goldman's $145 target, by contrast, appears to reflect a forward multiple applied to 2026 estimated EBITDA that incorporates continued Macau recovery, sustained Las Vegas strength, and the potential for margin expansion as the company exits its peak capex cycle by the end of 2026. The firm's commentary emphasizing "transformative upside" suggests that the $145 figure may be conservative if the Wynn Al Marjan project opens on schedule in early 2027 and generates returns consistent with management's internal case.

Peer valuation provides additional context for reconciling the divergent views. Las Vegas Sands and MGM Resorts—both similarly leveraged operators with Macau exposure—have traded at EV-to-EBITDA multiples in the mid-teens during 2025, with periodic expansions to 18-20 times during quarters when Macau data exceeded expectations. WYNN's premium positioning and the UAE optionality arguably justify a modest premium to peers, particularly if investors believe the company's Las Vegas assets command sustainably higher margins. The stock's 55 percent year-to-date gain reflects partial recognition of these factors, but Goldman's view is that the market has not yet fully priced the implications of Macau returning to 90-95 percent of pre-pandemic revenue levels while Las Vegas simultaneously operates at record profitability.

Peer Context#

The broader gaming sector has experienced volatility in 2025 as investors grapple with conflicting signals about consumer health and regional recovery timelines. Las Vegas Sands, with heavier Macau and Singapore exposure, has benefited from the same regional trends supporting WYNN but faces its own balance sheet and capex challenges related to New York development plans. MGM Resorts has leaned more heavily on domestic operations and its BetMGM sports betting venture, offering a different risk-return profile that limits direct comparability. The relative stock performance across these operators during 2025 reflects the market's growing appreciation for companies with meaningful Macau exposure and premium positioning, as these attributes have translated into both revenue growth and margin expansion during the recovery phase.

Caesars Entertainment, with minimal international exposure, serves as a pure-play domestic proxy and has underperformed both WYNN and peers with Macau exposure during the second half of 2025, reinforcing the view that Macau recovery is a material driver of relative outperformance within the sector. This performance divergence provides context for Goldman's upgrade, as the firm appears to be positioning WYNN as a best-in-class operator with exposure to both recovering Macau and resilient domestic markets. The valuation premium that Goldman's $145 target implies relative to sector peers reflects confidence that WYNN's operational execution and strategic positioning justify a multiple expansion even as absolute valuation levels remain elevated by historical standards.

Operational Momentum Through Year-End#

Management's commentary during the third-quarter earnings call provides forward-looking indicators that extend investor visibility beyond the reported September results. CEO Craig Billings' observation that mass gaming volumes in Macau "remained strong through October and early November" directly addresses the question of whether third-quarter strength represented a temporary spike or the beginning of a sustained recovery. The October and November regulatory data—showing the highest monthly totals since 2019 and the tenth consecutive month of year-over-year gains—validate management's characterization and reduce the risk that fourth-quarter results will disappoint relative to the trajectory established in the third quarter. This forward visibility is particularly valuable for institutional investors who seek to model out 2026 earnings and assess whether current valuation multiples are sustainable.

Domestic Performance Signals#

Las Vegas operations posted an all-time monthly EBITDA record in August, a data point that management highlighted during the third-quarter call to underscore the property's operating leverage and pricing power. The August record is significant because it occurred during a period when broader Las Vegas market data showed mixed signals, with some properties reporting softer demand from leisure travelers amid concerns about consumer spending. WYNN's ability to set records during a challenging market environment suggests that its premium positioning—targeting higher-income consumers less sensitive to macroeconomic headwinds—is functioning as management intended. The company's decision to prioritize rate over occupancy, explicitly noted by CEO Billings, reflects confidence that demand from its core customer segments remains robust enough to support premium pricing without sacrificing overall profitability.

The strong start to the fourth quarter mentioned by management aligns with seasonal patterns that typically favor Las Vegas properties during the holiday period and convention season. More importantly, the commentary about 2026 group bookings pacing ahead of the prior year provides visibility into revenue that is effectively locked in, reducing uncertainty about the first half of 2026. Group business—encompassing corporate events, conventions, and large-scale gatherings—generates higher margins than transient leisure travel and offers more predictable cash flows, making it a critical component of the investment thesis. The fact that 2026 bookings are pacing ahead suggests that corporate travel budgets remain healthy and that Las Vegas continues to gain share as a premier convention destination, both of which support the argument that domestic operations can sustain record-level profitability.

International Recovery Path#

Macau's recovery has progressed through distinct phases, beginning with the initial reopening surge in early 2024, followed by a consolidation period as VIP junket business remained depressed under new regulatory restrictions, and now entering a phase characterized by sustained mass-market and premium-mass growth. The October data showing the highest monthly total since 2019 marks an inflection point where the recovery has moved from partial restoration toward full normalization, at least in aggregate revenue terms. Importantly, the composition of that revenue has shifted materially away from VIP toward mass gaming, a dynamic that favors operators like WYNN with premium mass-market positioning and reduces exposure to the hold-rate volatility that historically plagued VIP-focused businesses.

The 19 percent increase in premium mass betting volume during November, despite event-related disruptions, demonstrates the segment's resilience and confirms that the third-quarter strength was not an isolated phenomenon. Premium mass customers—typically affluent leisure travelers from mainland China and other Asian markets—represent the sweet spot for WYNN's Macau properties because they generate casino revenue comparable to lower-tier VIP players while requiring less credit risk management and exhibiting more stable play patterns. The continued growth in this segment supports management's thesis that Macau is on a path to sustained recovery rather than experiencing a temporary bounce, and it provides a foundation for the argument that regional EBITDA can expand beyond the $308 million achieved in the third quarter as market conditions continue to normalize.

Balance Sheet and Capex Cycle Revisited#

WYNN carries $13.4 billion in total debt, with net debt standing at approximately $11 billion after accounting for cash and cash equivalents. The balance sheet also reflects negative shareholder equity of $281 million, a structural artifact of the company's historical dividend policy, share repurchases, and debt-financed growth investments. These metrics remain factually accurate and continue to represent the primary source of downside risk for equity holders, as any material deterioration in operating cash flow could force difficult decisions about capital allocation, dividend sustainability, or the pace of Wynn Al Marjan construction. However, the restoration of quarterly profitability to the $88 million range and sustained EBITDA generation above $550 million per quarter materially improve the company's debt service coverage and reduce the near-term risk of balance sheet stress.

Leverage Coverage Improving#

Third-quarter net income of $88.3 million, while modest in absolute terms, represents a significant improvement from the prior year's loss and demonstrates that the company can generate positive earnings even while servicing $13.4 billion in debt and investing heavily in the UAE project. Free cash flow generation during the third quarter totaled $473 million on an annualized basis according to prior disclosures, implying a free cash flow yield of approximately 4.5 percent on the current market capitalization of $10.5 billion. That yield is attractive relative to investment-grade fixed income but remains pressured by the ongoing capital commitments to Wynn Al Marjan, which management estimates will require an additional $600 million to $675 million in equity contributions through the project's completion in early 2027. The company's ability to sustain both the UAE investment and quarterly dividends of $0.25 per share hinges on continued strength in Las Vegas and Macau cash flows.

Management has signaled that the peak capex cycle will conclude by the end of 2026, a timeline that implies material free cash flow inflection beginning in 2027 as construction draws wind down and the UAE property approaches its opening. The normalization of capital expenditures from current elevated levels to steady-state maintenance capex would free up several hundred million dollars annually for debt reduction, incremental shareholder returns, or opportunistic growth investments. Goldman's $145 price target appears to embed some probability-weighted value for this free cash flow inflection, reflecting the view that investors should look through the current period of elevated capex intensity to the normalized earnings power and cash generation that will characterize the business post-2026. This forward-looking framework stands in contrast to the bearish view that emphasizes current leverage metrics and near-term cash flow constraints.

UAE Investment Payoff Timeline#

Wynn Al Marjan Island represents the single largest investment in WYNN's history, with total project costs estimated between $5 billion and $6 billion and the company holding approximately 40 percent of the equity. The property is scheduled to open in early 2027 with 1,530 rooms and comprehensive luxury amenities, positioning it as the anchor for Ras Al Khaimah's emerging Al Marjan Island destination cluster. The investment thesis rests on the premise that the UAE will become a significant global gaming jurisdiction and that WYNN, as the sole initial operator, will capture outsized market share and establish a brand presence that translates into pricing power and customer loyalty. The risk case centers on execution challenges, regulatory uncertainties, and the possibility that demand for UAE gaming will prove weaker than management's internal projections.

Goldman's emphasis on the UAE project as a driver of "transformative upside" suggests that the firm views the 2027 opening as a de-risked catalyst rather than a speculative hope. The construction timeline has remained on track despite regional geopolitical complexities, and the November 2024 announcement of a second joint venture partnership with Aman Group's Janu brand signals that the broader Al Marjan ecosystem is developing as planned. If the property opens on schedule and generates returns consistent with management's underwriting—a significant if, given the lack of precedent for luxury integrated resorts in the UAE market—the incremental EBITDA contribution could approach $200 million to $300 million annually within the first few years of operation. Capitalizing that incremental EBITDA at a multiple consistent with the company's Las Vegas assets would imply substantial equity value creation, supporting the bull case that current valuation does not fully reflect the UAE optionality.

Outlook#

Institutional investors assessing WYNN at current levels confront a binary decision: whether to credit the operational momentum documented in third-quarter results and recent Macau data, or to emphasize the persistent balance sheet risks and consumer uncertainty that characterized the bearish thesis three weeks ago. Goldman's upgrade to Conviction Buy with a $145 target offers a clear articulation of the bull case, grounded in best-in-class Las Vegas assets, a recovering Macau market approaching pre-pandemic revenue levels, and the approaching UAE opening that management frames as a transformational growth driver. The firm's view is that the market has not fully priced the implications of these dynamics playing out successfully, particularly if the capex cycle completion in late 2026 frees up cash flow for debt reduction or incremental shareholder returns.

The bear case remains intellectually coherent despite the recent positive data. Consumer spending patterns in the United States have shown stress in discretionary categories, and any meaningful deterioration in employment or income growth could pressure Las Vegas volumes even if WYNN's premium positioning provides some insulation. Macau's recovery, while encouraging, still faces risks from Chinese regulatory shifts, economic slowdown, or changes in travel policies that could constrain mainland visitor volumes. The VIP hold normalization that benefited third-quarter results could reverse in subsequent quarters, reintroducing earnings volatility. And the UAE project, while progressing on schedule, carries execution risk and demand uncertainty that will not be fully resolved until the property opens and generates several quarters of operating history.

Bull Case Path to $145 and Beyond#

The path to Goldman's $145 target requires that fourth-quarter results confirm the third-quarter trajectory, with Macau sustaining monthly gross gaming revenue above $2.5 billion and Las Vegas maintaining EBITDA margins in the mid-to-high 30 percent range. If those conditions hold, full-year 2025 EBITDA should approach $2.2 billion, providing a foundation for 2026 estimates in the range of $2.3 billion to $2.4 billion assuming modest continued improvement in Macau and steady Las Vegas performance. Applying a 16-18 times forward EV-to-EBITDA multiple—consistent with peer valuations during periods of operational momentum—would support an enterprise value in the range of $37 billion to $43 billion. Subtracting $11 billion in net debt and dividing by approximately 105 million fully diluted shares yields equity values ranging from $135 to $155, bracketing Goldman's $145 target and suggesting that the upgrade reflects a conventional valuation framework rather than an outlier assumption set.

Upside to Goldman's target would require either faster Macau recovery than currently modeled, exceptional Las Vegas performance driven by a strong convention calendar and resilient high-end consumer spending, or positive surprises related to the UAE project such as earlier-than-expected opening or stronger-than-modeled demand indicators. The stock's 55 percent year-to-date gain reflects partial recognition of the bull case, but the proximity to four-year highs and the double-top technical pattern forming at $134 suggest that a sustained breakout above that level would likely require a catalyst such as fourth-quarter earnings that materially exceed consensus or incremental positive commentary from management about 2026 outlook. The call option skew documented by Schaeffer's—with call volume outpacing puts by nearly 6-to-1—indicates that options traders are positioning for continued upside, though affordably priced implied volatility suggests the market is not pricing a high probability of explosive near-term gains.

Bear Case Triggers#

The bearish view would reassert itself if fourth-quarter Macau data shows sequential deterioration rather than stability, raising questions about whether the October-November strength represented a temporary spike tied to Golden Week and event-driven demand rather than sustainable recovery. Any meaningful miss on Las Vegas EBITDA—whether driven by softer volumes, margin compression, or higher-than-expected operating costs—would similarly undermine the premium valuation and force investors to reassess whether the all-time August record was an outlier. Commentary from management during the fourth-quarter earnings call (expected in February 2026) will be critical, particularly any language about consumer trends, forward booking pace, or Macau hold rate normalization. Weaker-than-expected guidance or cautious tone could trigger a repricing toward the $104-$110 range implied by the November downgrade.

Balance sheet concerns would intensify if free cash flow generation disappoints due to higher-than-expected UAE capex draws, weaker operating cash flow, or unexpected working capital requirements. The company's ability to sustain its $0.25 per share quarterly dividend while funding the remaining $600-$675 million in Al Marjan equity commitments depends on continued strength in Las Vegas and Macau cash generation. Any indication that management is considering dividend cuts, pausing share repurchases, or slowing UAE construction to preserve liquidity would signal balance sheet stress and likely trigger material equity downside. Similarly, adverse developments in the UAE regulatory environment, construction delays, or partnership complications with the Janu project could raise questions about whether the 2027 opening timeline is achievable and whether the investment thesis for the broader Al Marjan ecosystem remains intact. For institutional investors, the choice between Goldman's $145 bull case and the lingering $104 bear case hinges on conviction about the sustainability of recent operational momentum and the appropriate weighting of near-term balance sheet risks versus medium-term earnings power.