Feb. 29, 2004 - Wynn Resorts topped off twice this week: It poured the top slab on its signature Las Vegas resort and its stock continued its remarkable climb with share price increases leading all other major gaming companies. 

Despite having neither cash flow nor operating income, and with more than a year to go before its Las Vegas property even opens, shares closed Friday at $36.34, up about 180 percent since Las Vegas developer Steve Wynn took his company public on Oct. 25, 2002. 

Over the same 16-month period, gaming stocks as a whole have increased 70 percent in value and the Standard & Poor's 500 Index has increased about 15 percent. 

Analysts believe Wynn Resorts' performance has been driven by the stock's initial undervaluation, improving expectations of the company's performance and the success of its neighbor, The Venetian, whose assets it mirrors. 

University of Nevada, Las Vegas professor and casino industry expert Bill Thompson said Wynn is building a company on the foundation of great expectations. Other casino operators have called that "hype." 

"Everyone saw what happened with The Mirage when it opened, and with Bellagio. As they see (Wynn Las Vegas) moving forward, they're coming to believe it'll be a repeat performance and could lead to a fourth wave (of gaming expansion in Las Vegas)," he said. 

Deutsche Bank analyst Andrew Zarnett said the investors are really pushing Wynn Resorts' stock up based on the current performance of The Venetian, sitting across Sands Avenue from the Wynn Las Vegas site. 

"Wynn stock has become the trading stock for The Venetian. People are buying Wynn for what they think is the closest to The Venetian. Success for (Las Vegas) Sands (which owns the Venetian, but is not publicly traded) will drive Wynn further," he said, noting the two companies are both targeting the high-end convention market and are entering the Macau gaming market. 

"We expect it'll go even further as the Venetian Macau (casino) opens, probably in late April, because the assets of the two (companies) duplicate each other," Zarnett said. 

The Venetian is developing a $550 million Venetian-style resort complex on the island of Macau off the coast of mainland China and has also unveiled plans for a $5 billion to $10 billion project to turn a strip of reclaimed land in Macau into a huge resort patterned after its flagship Venetian property. 

Zarnett said the developments at The Venetian are a net positive for Wynn because he has public stock and can raise money on short notice. 

Brian Gordon, spokesman for Applied Analysis, a Las Vegas-based financial consulting firm, said shares in Wynn Resorts came out of the starting gate in October 2002 with a lot of room for price appreciation based on its initial valuation relative to predicted levels of cash flow, a key measure of profits, after Wynn Las Vegas opens. Cash flow is generally defined as earnings before interest, taxes, depreciation and amortization. 

"You have a company projecting cash flow in the $600 million range, $250 million in Las Vegas and $350 million in Macau. If you tack on the normal multiple to figure book a value, the stock should be trading at a price to value the company at $4.8 billion, less debt," he said. 

"But it's currently trading at a market capitalization of just $2.5 billion. That suggests the investing public is continuing to invest on the expectation it will ultimately meet the expected valuation," Gordon said. 

Deutsche Bank analyst Marc Falcone, however, said Wynn's decision to concentrate his energy on the Las Vegas market and on developing a casino in Macau gave investors added confidence he would beat his initial cash flow predictions. 

"His focus spells pretty strong growth for his cash flow over the next three to four years," Falcone said, praising Wynn's recent decision to drop out of the bidding for Illinois' final gaming license so he could concentrate on plans for a possible second tower at Wynn Las Vegas. 

Meanwhile, Wynn said Friday the roof slab was poured this week and the 50-story Wynn Las Vegas was topped off, although the parapet that will bear the resort's name still has to be added. 

"The project is going wonderfully and now you see all the rooms (in the completed shell)," he said. 

The 613-foot hotel tower, the most visible element of $2 billion resort development and about 20 percent taller than Mandalay Bay, is not slated to open until April 2005. 

Wynn said he was convinced after a tour this week that the hotel-casino will be even better than he had expected and that he has arranged to make digital video disks of the property to offer virtual tours. 

However, he said it is premature to discuss a possible second tower at Wynn Las Vegas. 

"We're not ready to make an announcement," he said, adding no decision has been made yet. 

Wynn also said he is getting ready to break ground on his $500 million development in Macau, probably in June or July. A model of the 14-acre project planned off the coast of China will be completed in a couple of weeks and he expects to accept bids from possible builders by March 23. 

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