Wynn Resorts has a good start to 2023 because Wells Fargo has upgraded the stock.

With a boost from Wells Fargo analyst Daniel Politzer, Wynn Resorts stock got off to a good start in 2023.

In a note to clients, the analyst changed Encore’s rating from “equal weight” to “overweight” and raised his price target for the shares from $74 to $101 per share. From Wynn’s last closing print of 2022, Politzer’s new prediction shows an upside of more than 23%. The gaming stock ended the year with a small loss, but it did much better than the market as a whole.

WYNN is very dependent on Macau’s GGR recovery, which is becoming clearer after China changed its policy. This is the best growth opportunity in gaming, Politzer wrote. “Also, US fundamentals are strong. Las Vegas has big citywide events in three of the next five quarters, and once Massachusetts sports betting starts, Boston should see an increase in visitors, databases, and gross gaming revenue.”

With the Wells Fargo upgrade, shares of Wynn, which is based in Las Vegas, are up by 3.32 percent in early trading on Tuesday. This is one of the best performances among all consumer discretionary stocks. The bank has put the gaming stock on its list of “tactical ideas” for the first quarter.

Wynn Resorts sees Macau as a big deal.

Wynn went into 2023 in good shape, thanks in large part to a recent string of good news stories, such as Macau’s decision to renew the licenses of the six established concessionaires, including Wynn Macau, and China’s recent call to end its zero-COVID policy.

Even though there are still risks in the special administrative region (SAR), such as the chance of a big coronavirus outbreak and the chance that China will put travel restrictions back in place, Politzer thinks Wynn can get back to how it was before the pandemic there more quickly. The operator only has 2,700 guest rooms in Macau, which is the second-fewest of the six concessionaires. That could be a sign that Wynn needs less time to get back up to speed now that it’s back open.

Politzer said, “We’ve thought for a long time that Macau’s recovery is still the most important thing for WYNN’s stock.” “For the first time in a few years, we think things will get better because China is abandoning its COVID-zero strategy and easing travel restrictions.”

The analyst also said that Wynn Macau could return to 2019 operating results, which would go a long way toward calming investors’ fears about the operator’s high debt. Wynn could do better this year because it will depend less on VIPs and will get more traffic from high-end mass players in Macau.

A filing with the Hong Kong Stock Exchange shows that the gaming company came to an agreement with its Wynn Macau unit. Under the agreement, Wynn Macau’s trademark payments to the parent company will be capped at $75,2 million this year.

Fertitta is a big deal for them as well.

Fertitta Entertainment, which is owned by Tilman Fertitta, could also play a big role in the 2023 outlook for Wynn Resorts stock. Last November, that company bought a 6.1% stake in Wynn. This company owns and runs the Golden Nugget casinos.

It was a smart move on Fertitta’s part, because the price of Wynn shares shot up until the end of 2022. This means that he is already making money on the investment.

At the moment, it looks like a passive position, but Fertitta has a history of taking passive stakes in companies and then making offers to buy them later. Some people who follow the stock market have already said that he might try to buy Wynn at some point this year.