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Wynn Resorts, MGM Climb as Macau Eases COVID-Testing Rules

Shares of casino companies with operations in Macau rose on Tuesday after the government eased its COVID-testing rules.
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Shares of casino companies with operations in Macau, such as Wynn Resorts  (WYNN) - Get Wynn Resorts, Limited (WYNN) Report and MGM Resorts  (MGM) - Get MGM Resorts International (MGM) Report, rose on Tuesday after Macau’s government unveiled looser COVID-testing rules.

Starting on Wednesday travelers from mainland China who haven’t been to a foreign country or Hong Kong must have a negative COVID test less than seven days before their arrival in Macau.

The prior regulation demanded that a test be conducted within the prior 48 hours, according to the Macau government’s website.

Wynn recently traded at $97.96, up 5.4%; MGM at $40.76, up 3.2%; and Las Vegas Sands  (LVS) - Get Las Vegas Sands Corp. (LVS) Report at $41.83, up 5.3%.

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Morningstar analyst Dan Wasiolek is bullish on Wynn, putting fair value at $114.

Two weeks ago he wrote, “COVID-19 continues to materially impact Wynn's Macau operations (76% of pre-pandemic 2019 Ebitda), which we view as transitory.”

He views Wynn as “a high-end iconic brand that is well positioned to participate in the attractive long-term growth opportunity of Macau, as it expanded its room share in the region through the August 2016 opening of the Palace. “

To be sure “This is offset by the expected long-term shift away from VIP and gaming revenue (where Wynn has outsize exposure) toward non-gaming and mass play, as well as its existing Macau property on the peninsula, where traffic has lagged Cotai,” Wasiolek said.

Still, “[long term], we see solid visitation and gaming growth for Macao.”

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