Wynn Macau, Limited (HKG:1128) Analysts Just Slashed This Year's Estimates

Today is shaping up negative for Wynn Macau, Limited (HKG:1128) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the current consensus from Wynn Macau's 13 analysts is for revenues of HK$12b in 2022 which - if met - would reflect a credible 5.9% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 21% to HK$0.79. Yet before this consensus update, the analysts had been forecasting revenues of HK$14b and losses of HK$0.67 per share in 2022. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for Wynn Macau

The consensus price target fell 5.7% to HK$7.91, with the analysts clearly concerned about the company following the weaker revenue and earnings outlook. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Wynn Macau, with the most bullish analyst valuing it at HK$23.56 and the most bearish at HK$5.00 per share. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how think this business will perform. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that Wynn Macau's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 5.9% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 18% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 25% annually for the foreseeable future. So although Wynn Macau's revenue growth is expected to improve, it is still expected to grow slower than the industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Wynn Macau. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Wynn Macau's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Wynn Macau.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Wynn Macau going out to 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.