Wynn Working Hard To Get Back To Winning Ways

News of a coronavirus vaccine from Russia this morning was enough to send the S&P 500 index to all-time highs in pre-market trading and Wynn Resorts (NASDAQ: WYNN) up more than 4%. Shares of the high-end hotel and casino company have had a strong start to August and this looks set to continue.

They closed Monday’s session up 10% and will be up more than 20% on the month if today’s strength continues. It’s been a long four months since the stock managed to stop the COVID forced selling after a 75% haircut from January’s highs, but finally, shares look ready to return to winning ways .

95% Drop In Revenue

Even a horrendous earnings report last week wasn’t enough to spoil the party and if anything it confirmed that the worst-case scenario has largely been priced into the current share price. EPS was heavily in the red and far lower than analysts expected while revenue for last quarter contracted almost 95% year on year.

The $85 million in reported revenue is an astounding print for a company that reported more than $1.5 billion in quarterly revenue this time last year. It shows just how ruthless the coronavirus pandemic has been to companies exposed the most.

Still, with shares on the up in recent weeks it’s clear that Wall Street is seeing brighter days ahead and isn’t afraid to buy into the recovery story. CEO Matt Maddox spoke to recent progress in last week’s report when he said “we are pleased to be up and running again in each of our markets. In early June, we reopened nearly our entire Wynn Las Vegas and Encore campus with an intense focus on cleanliness and safety. Similarly, in Boston, we reopened Encore Boston Harbor on July 12 to a positive reception as many of our customers currently prefer to stay close to home. In Macau, the authorities have begun to gradually and thoughtfully ease some visitation restrictions, and we are confident the market will benefit from the return of the Chinese consumer as we move through the back half of 2020."

Bright Days Ahead

The developments from Macau, known as the Las Vegas of Asia, are particularly bullish. Only yesterday, authorities there confirmed that the mandatory two week quarantine that was strictly enforced upon visitors' return to the mainland will be lifted.

Bank of America quickly updated their price objective on the stock to $95, more than 15% above Monday’s closing price. In a note to clients, they said “this is a slight premium to historic averages that we believe is justified given key catalysts such as 1) a faster potential reacceleration in Macau, 2) reopening of WYNN's domestic properties and 3) WYNN's strong liquidity position".

While of course any fresh coronavirus cases that are linked to the relaxing of that rule will surely result in it being reversed, these are the kind of baby steps towards normalcy that the likes of Wynn have been craving for. If August’s gross gaming revenue (GGR) figures beat expectations then this will help reinforce the idea that a full recovery is well and truly on.

Investors looking to get involved at these levels have a solid support line around the $70 to plan entries or exits, while June’s $109 remains the post-COVID high watermark to beat. As we noted above, there is huge room to the upside if positive developments keep flowing and the share price will having plenty of catching up to do.