Gotham's Gamble: Wynn Resorts Bets Big in the Desert, But Is It a Joker's Trick?

A Desert Mirage or a Solid Bet?

Bank of America seems to think Wynn Resorts is about to hit the jackpot. An upgrade to 'buy,' they say. A pat on the back with a price target of $100. But I've learned one thing in Gotham: never trust a smile especially one promising easy money. This supposed goldmine is in the UAE – Al Marjan Island to be precise. The Middle East's first 'major integrated casino resort.' Sounds fancy. Sounds expensive. Sounds like a prime target for... well let's just say 'unforeseen circumstances.'

Five Billion Dollars?!

They're already halfway through this five billion dollar endeavor! Five billion could rebuild Crime Alley a thousand times over. Instead it's going into slot machines and roulette wheels. Classic. Bank of America thinks the investors will 'price this into the stock' in the next year and a half. I'll be pricing it into my threat assessment. Gotham taught me to think ahead.

Tax Havens and Tourism: A Recipe for...Something

According to the Bank of America eggheads 'density and growth of wealth relocating to the region amid a friendly tax and business climate plus well established tourism infrastructure are major tailwinds'. Tailwinds? More like a sandstorm of potential problems. Remember what happened to the last guy who thought he could outsmart the system? He ended up frozen in a block of ice. Mr. Freeze learned the hard way just because the temperature is 'friendly' doesn't mean the environment is.

Macau Blues: China's Shadow Looms

The analysts are worried about China and Macau. A valid concern. But this UAE venture is supposed to be Wynn's 'get out of jail free' card. Diversification they call it. I call it shifting the target. Whether it's Gotham or Dubai corruption always finds a way. This new venture is supposed to help re assert Wynn's 'once premium valuation.' I'm more concerned with asserting justice not valuations. Tell me do you bleed money?

Vegas Baby! (Still)

Apparently Wynn's Las Vegas assets are still 'best in class.' Who knew? Even a city built on vice can be a source of strength. But remember 'It's not who I am underneath but what I do that defines me.' Just because Vegas is doing well doesn't mean this desert gamble is safe.

The Bottom Line: Trust But Verify

The stock's already jumped 3% on this news. Fifteen out of eighteen analysts are apparently on board. The average price target implies a 28% upside. Sounds too good to be true doesn't it? As my father always said 'Why do we fall Bruce? So we can learn to pick ourselves up.' But sometimes it's best not to fall in the first place. I'll be watching Wynn Resorts. Closely. As always. Because someone has to.