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Wynn Resorts stock rises following analyst upgrade

Yahoo Finance markets reporter Josh Schafer discusses the rise in Wynn Resorts shares amid an upgrade from Barclays and the overall pop in casino stocks, including Las Vegas Sands, MGM, and Caesars.

Video transcript

[AUDIO LOGO]

SEANA SMITH: Shares of Wynn Resorts on the rise today, up nearly 6 and 1/2% after the team at Barclays upgraded the stock to overweight, making the case that this, quote, "isn't the end of Macau's momentum." Joining us now, we want to bring in Yahoo Finance's Josh Schafer. And, Josh, when you take a look at the reaction in the stock today, clearly the Street very excited about what they heard from Barclays. Why are they so bullish?

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JOSH SCHAFER: Yeah, Seana, so it's all about that Macau resurgence. And this is something that we heard from Wynn going back to their earnings call a couple of weeks ago, basically saying that Macau is coming back at a faster pace than they had expected and now at a faster pace than Wall Street had expected. So when you take a look at what that Macau segment has done for Wynn, they've reported $600 million in operating revenue in the first quarter. That's the most they've had in Macau since the fourth quarter of 2019.

Now, Barclays coming out today and essentially saying they think that Wynn is headed for adjusted EBITDA in comparison to 2019 at a quicker pace than initially anticipated. So they think they're going to get to about 80% of what they were at in 2019 by the end of this year. And then you can see on the chart on your screen, they think they can get to 100% of what they were doing in 2019 by 2024. So into next year.

And, Akiko, when we think about casinos as a whole, of course, this is a massive story because Macau used to be more than half of Wynn's overall revenue. And it is obviously a big player for something like Las Vegas Sands as well. It's a huge space or region for casinos.

AKIKO FUJITA: Well, yeah. And certainly, with China reopening, that's-- the activity picking up in a big way. How is this affecting other casinos?

JOSH SCHAFER: Yeah, so Las Vegas Sands you saw take a big jump today as well. I think it was up about 3% at one point. Yeah, up about 3% right now. And really, that's also because Las Vegas Sands is actually the biggest player over Macau. They have the most market share. So it's Las Vegas Sands, then Wynn, then MGM Resorts. And what's been interesting to see in commentary-- and Barclays was pointing this out today as well-- is travel still isn't all the way back to Macau.

So they've started to see more travel from inside China. But those surrounding countries, if you take a look at visitation from surrounding countries, it actually has not picked up really anywhere close to the levels it was in 2019. So there's still a lot more visitation to come. And so essentially, the argument here from the Street is, you can get out ahead of this because it's not really priced into the stock yet. And those revenues are going to keep going up and keep coming back. And that's obviously bullish overall for the space.

SEANA SMITH: Josh, what about the outlook here for Las Vegas? Because you and I have talked a number of times over the last several months that Las Vegas, the numbers of travelers that they are seeing day in and day out, the rates that they are charging for the hotels are at a record levels.

JOSH SCHAFER: And Wynn is winning that battle, which I think is fascinating too. There was a chart in that note pointing out that Wynn is actually getting the most per table, the most per slot, the most per room of anyone right now in Vegas. And Barclays came out and said that they think that that's going to be sticky. They think that Vegas travel overall is going to stay resilient. And they think Wynn is the winner in that space. Now, of course, when we talk overall slowdown, the question is, does that continue, right? Do people keep traveling to Vegas over the course of the year? Right now, we haven't seen any indicators that that won't keep happening.

AKIKO FUJITA: Yeah, and you wonder if that's going to pick up going into the summer. We keep hearing domestic travel staying closer to home. Vegas kind of the perfect opportunity. Although, I don't think I want to stay there in that weather.

JOSH SCHAFER: Not a far flight from LA, right, Akiko?

SEANA SMITH: I was going to say, you could even drive there.

AKIKO FUJITA: It's not a far drive.

JOSH SCHAFER: Akiko might be telling us about her vacation plans, I think.

AKIKO FUJITA: You might find me in Vegas in a few months. We'll see. All right, thanks so much for that, Josh.