Wynn Resorts will be able to overcome its founder's alleged misconduct scandal and thrive this year, according to one top Wall Street firm.
J.P. Morgan raised its price target to $214 from $196 for Wynn Resorts shares, citing lower regulatory risk after Steve Wynn's stock sale.
"Starting with Mr. Wynn's resignation February 6th and a handful of positive announcements that followed, Mr. Wynn has now fully divested his 12.1 million shares in WYNN, significantly reducing regulatory risk everywhere," analyst Joseph Greff wrote in a note to clients Tuesday. "We see multiple ways to win here – on fundamentals, on regulatory updates that don't result in meaningfully negative outcomes, on further strategic alliances."
Greff reiterated his overweight rating on Wynn shares. The company's stock rose more than 3 percent Tuesday.
Steve Wynn resigned as CEO and chairman of Wynn Resorts after a Wall Street Journal report published in January detailed allegations of decades of sexual misconduct by the gambling mogul. Wynn sold his stake in the company this month.
Greff said the casino company is trading at a 6 to 8 percent free cash flow yield on his 2018 to 2020 financial forecasts. He predicts the company will be able to maintain its 17 percent share of the lucrative Macau casino market.
Wynn's "valuation is pretty compelling," he wrote. "In our view, this is too cheap given the quality of these assets."
Steve Wynn has denied the allegations.