Wynn (NASDAQ:WYNN) stock has fared well over the last quarter or so, rising by about 50% since late October. The recent gains come as two major overhangs relating to the Macau business appear to be easing. Firstly, China’s State Council has been rolling back some Covid-19 restrictions, scaling back on mass testing, quarantine requirements, and the use of the health code system. This could help to drive a recovery in the Macau casino market, which has seen gaming activity trend at a fraction of 2019 levels amid a dramatic decline in tourist inflows. Moreover, Wynn announced that it had signed a 10-year agreement with the Macau government relating to the renewal of its gaming concession. Investors had been uncertain about whether the licenses would be renewed as the Macau government launched a gambling review last year, following a regulatory crackdown. Moreover, the conditions under which the licenses were offered also appear to be reasonable and this should come as a relief for the markets.
So what’s the outlook like for Wynn stock? Wynn has seen a strong performance of its U.S. properties in recent quarters. Wynn Revenue for Q3 2022, fell by just about 10% year-over-year to $890 million despite the Macau issues, and came in ahead of analyst expectations as revenue from its Las Vegas and Boston properties grew by double-digits. The company could also see an upside from its interactive business, with Massachusetts planning to legalize sports betting. Moreover, the eventual recovery in Macau should also help the company significantly, given pent-up demand and the fact that the market accounted for about 70% of the company’s pre-pandemic revenue. The company’s liquidity position is also reasonable, with cash holdings expected to stand at over $3.5 billion accounting for the cash generated from the sale and leaseback transaction for the Encore Boston Harbor property. That said, there are risks as well. The recent surge in Covid-19 cases in China could delay the return of tourists to Macau. Moreover, the U.S. economy also faces risks, amid rising interest rates, with a recession appearing increasingly likely. This could weigh on consumer spending, directly impacting Wynn’s stock. We value Wynn stock at about $86 per share, which is 8% ahead of the current market price. See our analysis on Wynn Resorts valuation for more details on what is driving our price estimate for the stock.
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|Trefis Multi-Strategy Portfolio||-6%||-22%||212%|
 Month-to-date and year-to-date as of 12/26/2022
 Cumulative total returns since the end of 2016