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Big Wynn Boosts Casino Stocks

Shares of Wynn Resorts soar after a blowout quarter, lifting other Macau players.

Updated from Aug. 6

Wynn Resorts

(WYNN) - Get Wynn Resorts, Limited (WYNN) Report

shares vaulted 13% Tuesday after the casino operator blew away analysts' second-quarter earnings estimates amid strong results at both its Las Vegas and Macau casinos.

The report also buoyed other casino owners, particularly those operating in Macau, as it soothed worries that visa restrictions in the Chinese region were hurting traffic.

Wynn said late Monday that it swung to a second-quarter profit of $89.6 million, or 82 cents a share, from a year-earlier loss of $20.1 million, or 20 cents per share a year earlier.

On an adjusted basis, the earnings were 92 cents a share, compared with the 53-cent average estimate from analysts surveyed by Thomson Financial.

Wynn's net revenue more than doubled to $687.5 million from $273.4 million last year. That topped the $603.7 million that Wall Street expected.

"Bonds Hits 755, A-Rod Hits 500, Wynn Hits It Out of the Park," read the headline on a research report from Jefferies & Co. analyst Larry Klatzkin. Numerous sell-side analysts increased their 2007 and 2008 earnings estimates for Wynn after the report.

The company's two casinos -- the Wynn Las Vegas and Wynn Macau -- each reported impressive results. The Las Vegas property saw property cash flow grow 58%, with improved margins. Net revenue rose to $159.4 million from $113.5 million last year.

The Macau property, which opened in September 2006, generated net revenue of $352.5 million and adjusted property cash flow of $92.7 million.

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The Macau results show that despite concerns over visa restrictions in the region, the market continues to post strong growth. Recently, the Chinese government has made it more difficult for certain mainland visitors to travel to Macau.

While day-trip visitation might be down, longer-term visitors appear to be boosting the demand at the casinos, says a buy-side source whose firm owns shares of

Las Vegas Sands

(LVS) - Get Las Vegas Sands Corp. (LVS) Report

, but not Wynn.

"You're seeing the growth in the depths of the market," the investor says.

Wynn's stock recently was up $13.68 to $121.07, easily surpassing the 52-week high of $114.60 set in February.

Shares of

Melco PBL

(MPEL)

, a pure-play on the Macau market, were up 5.6%. Las Vegas Sands, owner of the Sands Macau, was up 4.6%.