The Zacks Analyst Blog Highlights: Honda Motor, Toyota Motors, Wynn Resorts, Las Vegas Sands and MGM Resorts International

Sep 15, 2011, 09:30 ET from Zacks Investment Research, Inc.

CHICAGO, Sept. 15, 2011 /PRNewswire/ -- announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Honda Motor Co. (NYSE: HMC), Toyota Motors (NYSE: TM), Wynn Resorts Limited (Nasdaq: WYNN), Las Vegas Sands Corp. (NYSE: LVS) and MGM Resorts International (NYSE: MGM).


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Here are highlights from Wednesday's Analyst Blog:

Honda Recalls Pilot SUV

Honda Motor Co. (NYSE: HMC) plans to recall 310,773 units of 2009-2011 Pilot mid-size crossover SUV in order to inspect and replace the front seat belts of the vehicles.

The automaker detected some problems with the seat belts' stitching due to improper manufacturing. There is a danger that belts may potentially come loose in a crash, increasing the risk of injury.

Honda has not received any reports of injuries or deaths due to the defect. The company asked the affected vehicle owners to take the vehicles to the authorized dealer for inspection when they receive a recall notice.

Automotive safety recalls were brought into focus by media after Toyota Motors' (NYSE: TM) announcement of the largest-ever global recall of about 11 million vehicles since September last year. The automaker made greater than 15 recalls, more than any other automaker. They were related to problems associated with faulty accelerator gas pedals, slipping floor mats and defective braking systems.

At the beginning of this month, Honda recalled 962,000 cars globally in order to fix a problem with their power windows and computer systems. The recall involved 936,000 units of Fit and CR-V (including 80,111 units in the U.S.) and 26,000 units of CR-Z compact hybrids (including 5,626 units in the U.S.). No injuries have been reported related to either of the problems.

In 2011 till date, Honda's largest recall included 1.5 million cars in the U.S. due to a problem with the transmission system. The recall included CR-V (model year 2007-2010), Elements (2005-08) and Accords with 4-cylinder engines (2004-10).

Apart from vehicle recalls, Honda has been struggling with lower sales and profits, adverse impact from earthquake and tsunami in Japan and a recent and harsh Consumer Reports review of its popular Civic compact car.

Honda, a Zacks #4 Rank (Sell) stock, posted a sharp 88.3% fall in profit to 31.8 yen billion ($394 million) or 17.64 yen per share (22 cents per share) in the first quarter of its fiscal year ended March 31, 2012 from 272.49 yen billion or 150.27 yen per share in the same quarter of prior fiscal year. The decline in profit was attributable to adverse impact from the earthquake and tsunami and Japan on March 11 and unfavorable currency translation effects.

Consolidated net sales and other operating revenues dipped 27.4% to 1.71 yen trillion ($21.24 billion) on the back of same factors outlined above, despite increased revenues in the motorcycle business. However, at constant exchange rates, revenues decreased 22.7% from the prior year.

Wynn Clears Gov't Hurdle for Cotai

Wynn Macau Limited, a subsidiary of Wynn Resorts Limited (Nasdaq: WYNN) has finally received its long-awaited approval from the Macau Government for development at the Cotai Strip. The land concession contract entails the company to construct a resort with a five-star hotel, gaming areas, retail and other amenities under its hood, in collaboration with Palo Real Estate Company Limited on 51 acres of land in the Cotai area.

Palo will lease the Cotai Land from the Macau government for an initial term of 25 years with a right to renew the contract for additional periods. The total land premium payable for the build-up is $193.4 million, including a down payment of around $62.5 million and eight additional semi-annual payments of around $16.4 million each.

Wynn Resorts, which boasts of a strong balance sheet in the gaming industry, will start incurring considerable capital expenditure once the Cotai project starts. Management targets to open Cotai Resorts in 2015.

Wynn Macau's contribution to the company's earnings has increased significantly in the last two years; the resort currently generates over 71% of the total revenue. Macau is the only Chinese city where gambling is legal. Wynn Macau, owned and operated by Wynn Macau Limited, opened to the public in September 2006 at the center of casino activities on the urban Macau peninsula. In order to expand its operations in Macau, Wynn Resorts opened Encore at Wynn Macau in April 2010.

On the flip side, competitive environment at Cotai is heating up. While Wynn Resorts' peer Las Vegas Sands Corp. (NYSE: LVS) intends to come up with a portion of its Parcel 5 and 6 developments in 2012, another major competitor MGM Resorts International (NYSE: MGM) is also awaiting an approval for land. MGM management indicated that MGM China is ready to start construction as soon as approvals from the Chinese government are granted with a completion timeframe of approximately 3 years. Apart from these western players, there are domestic players also who are eager to tap Cotai.

Wynn currently retains a Zacks #2 Rank, which translates into a short-term Buy rating. We are maintaining our long-term Neutral recommendation on the stock.

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