24/7 Wall St. Insights

• Increasing uncertainty about the stock market and the economy have income investors wondering where to look for opportunities.
• Among dividend stocks, Wall Street has big expectations for Wynn Resorts Ltd. (NASDAQ: WYNN).
• Also: Discover 2 dividend legends to hold forever.

Concern about a recession is growing. Things are beginning to look shaky for the Magnificent 7 and other big tech stocks. Moreover, there has been a shift toward small tech stocks for a while now. So the question for investors now, especially income-oriented investors, is whether dividend stocks are still the place to be. Where are the opportunities for the rest of this year and into the next?

Well, here are some dividend stocks for which analysts have big expectations. They all are members of the S&P 500 and have consensus Buy ratings.

Stock	Mean Target	Upside
Bath & Body Works Inc. (NYSE: BBWI)	$51.38	56.1%
Delta Air Lines Inc. (NYSE: DAL)	$60.63	56.7%
Global Payments Inc. (NYSE: GPN)	$142.97	46.0%
Schlumberger Ltd. (NYSE: SLB)	$65.34	48.2%
Vistra Corp. (NYSE: VST)	$110.36	44.6%
Western Digital Corp. (NASDAQ: WDC)	$91.56	56.9%
Wynn Resorts Ltd. (NASDAQ: WYNN)	$123.67	62.1%

So, as far as Wall Street is concerned, Wynn Resorts has the greatest potential upside in the coming year of these dividend stocks. Does that mean that its shares are undervalued? Or perhaps one overzealous analyst has skewed the mean?

Why Invest in Wynn Resorts?

Wynn Resorts stock is up about 505% from its 2002 initial public offering (IPO) share price. Shares traded for more than $240 a share in early 2014. The company is known for its luxury properties, award-winning restaurants, and exceptional service. It says it has more Forbes Travel Guide Five-Star Awards than any other independent hotel company. The stock was in retreat even before the recent market correction, but is it poised for a bounce back? What does Wall Street expect?

Wynn Resorts, the Company

The American company develops and operates high-end hotels and casinos through four segments.

The Wynn Palace segment operates private gaming salons and sky casinos; a luxury hotel tower with suites and villas, including a health club, spa, salon, and pool; food and beverage outlets; retail space; meeting and convention space; and performance lake and floral art displays.

The Wynn Macau segment operates casino space with private gaming salons, sky casinos, and a poker room; a luxury hotel tower that includes health clubs, spas, a salon, and a pool; food and beverage outlets; retail space; meeting and convention space; and Chinese zodiac-inspired ceiling attractions.

The Las Vegas Operations segment operates casino space with private gaming salons, a sky casino, a poker room, and a race and sports book; a luxury hotel tower with suites and villas, including swimming pools, private cabanas, full-service spas and salons, and a wedding chapel; food and beverage outlets; meeting and convention space; retail space; and theaters, nightclubs, a beach club.

The Encore Boston Harbor segment operates casino space with gaming areas and a poker room; a luxury hotel tower including a spa and salon; food and beverage outlets and a nightclub; retail space; meeting and convention space; and a waterfront park, floral displays, and water shuttle service.

Wynn Resorts headquarters are near Las Vegas. The company was founded in 2002 by former Mirage Resorts CEO Steve Wynn. It went public in the fall of 2002. Competitors include Caesars Entertainment Inc. (NASDAQ: CZR), Las Vegas Sands Corp. (NYSE: LVS), and MGM Resorts International (NYSE: MGM).

The company just released second-quarter results that fell short of top-line and bottom-line estimates despite a boost from Macau casinos. Results in the prior two quarters had topped expectations on the top and bottom lines. Wynn Resorts is bidding for a casino license to build an integrated resort at the Hudson Yards in New York City. If completed as planned, it would be one of the largest hotels in the city. Other plans include its first casino in the United Arab Emirates, as well as one in Thailand, should gambling be legalized there.

Wynn Resorts, the Stock

The share price sank to a 52-week low of $71.63 this week, retreating with the overall market. The stock is down more than 16% year to date, while the S&P 500 is up almost 9% in that time. Note that the $123.67 consensus price target is well above the 52-week high. However, just eight of 17 analysts who follow the stock recommend buying shares. Jefferies and Morgan Stanley maintained Hold-equivalent ratings in July, but Deutsche Bank and Wells Fargo reiterated Buy-equivalent ratings.

Institutional investors hold about 62% of the shares. Vanguard has a stake of almost 10%, while BlackRock and State Street also have notable stakes. Wynn is also a top growth stock pick by billionaire investor Ken Fisher. About 95 million shares, or less than 4% of the float, are held short.

Wall Street expectations for where the stock goes in the next 52 weeks vary but are all positive. The high price target suggests shares will double, and the consensus and low targets also signal plenty of room to run.

Low target	$96.00	25.8%
Mean target	$123.67	62.1%
High target	$154.00	101.9%

While the targets signal optimism, the analysts’ ratings suggest there is some caution as well. The outlook in the long term may appear strong, but the question of profitability and growth in the near time could cause some concern as well. Economic uncertainty (possibly a recession) and lingering inflation are factors to consider as well. However, Wall Street is far from pessimistic about the prospects for the stock.

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