Wynn Resorts Stock Has Rebound Potential, Says Research Firm

March 23, 2022 China Earnings & Filings

Wynn Resorts (NASDAQ:WYNN) stock is higher by 17 percent over the past week. While the casino operator is still in the red on a year-to-date basis, some market observers believe the shares offer compelling near-term potential.

Still hindered by travel restrictions in Macau and a recent spike of coronavirus cases in mainland China, the operator’s Wynn Macau arm remains under pressure. In normal business environments, Wynn’s operations in the world’s largest casino center drive approximately two-thirds of its earnings before interest, taxes, depreciation and amortization (EBITDA) and revenue.

Lethargy in the special administrative region (SAR) goes a long way toward Wynn’s 8% 2022 decline and its 41% drop over the past 12 months. However, some analysts see bright spots in Wynn’s options market.

At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 10-day put/call volume ratio of 0.65 that sits higher than 95% of readings from the past 12 months,” according to Schaeffer’s Investment Research. “This indicates that while calls are still outnumbering puts on an overall basis, the latter have been more popular during the past two weeks.”

Put options are the contracts traders purchase when making bearish bets, while calls are the options used to express bullish views.

Wynn Has Some Potential Catalysts
With Macau’s casino industry nowhere close to pre-pandemic form, some investors are overtly bearish on Wynn stock. But the operator has some levers to pull to potentially generate enthusiasm for the stock.

Those include deploying proceeds from the recently announced sale of the real estate of its Massachusetts integrated resort. Wynn announced the sale of Encore Boston Harbor’s property assets in conjunction with the release of its fourth-quarter results. At the end of last year, the company had $2.52 billion in cash and cash equivalents, and debt of $11.93 billion.