12:14 PM EDT, 09/27/2024 (MT Newswires) -- Wynn Resorts' ( WYNN ) underappreciated growth opportunity in the United Arab Emirates, near low valuation, and other factors give the company a favorable risk-reward and re-rating potential, Morgan Stanley said in a report.

Among the catalysts for the company include increased stability in Vegas versus the market, as well as further details on its UAE project at an Oct. 8 analyst event, and increased capital returns, the report said.

The note said Wynn Las Vegas should benefit structurally from a shift to higher end play, positioning of new attractions, and greater reinvestment against its peers.

On UAE project, Morgan Stanley said it is not appropriately valued in the stock at current levels.

"Historically, new markets with limited supply have generated outsized returns. The UAE has many similar demographic trends to Singapore plus the benefit of Wynn acting as the only operator for at least the first 3-5 years," the report said.

Morgan Stanley said the UAE project may generate more than $1.8 billion and $500 million in revenue and EBITDA, respectively, by maturity in the third year versus Wynn Vegas last year at $2.5 billion and $945 million.

The report also said a capital returns focus could act as a positive catalyst by mitigating downside amid geopolitical tensions and consumer spending fear in China abound.

Morgan Stanley upgraded Wynn to overweight from equal weight and increased its price target to $104 from $97.

Price: 96.33, Change: +5.30, Percent Change: +5.82