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Wynn Resorts

(WYNN) - Get Wynn Resorts, Limited Report

shares fell more than 6% on Tuesday following an analyst's downgrade and news the casino company will dilute its common stock.

Banc of America Securities analyst Jeremy Cogan downgraded Wynn from buy to neutral Tuesday, saying positive news is already baked into the stock's price. (Banc of America Securities has done and expects to do investment banking business with Wynn Resorts.)

"We remain fans of the Wynn story," Cogan wrote in a note accompanying his downgrade. "We continue to believe Wynn is in the crosshairs of three of the strongest themes in gaming (i.e., significant growth opportunities in Macau, strong Las Vegas fundamentals, and the recent speculation on land values on 'The Strip'

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in Las Vegas). Even so, at current levels we think most of the good news is discounted."

Cogan has just visited Macau and wrote that capacity growth in the southern Chinese city appears stronger than expected. "While we knew that new capacity was coming, our tour of Macau this week has clearly demonstrated that supply could exceed current Wall Street expectations despite the limited number of participants, i.e., we see the market gearing for a three- to four-time increase in table capacity by 2010 versus a healthy three-time increase in revenue," he wrote.

The analyst noted that Wynn's stock has risen more than 80% since mid-August. On Tuesday, shares fell $4.18, or 6.51%, to $60.01.

Also Tuesday, Wynn said it will sell an additional 7.5 million shares of its common stock through Deutsche Bank Securities. Expected to close next Monday, the offering will generate about $453 million. Wynn has about 90.5 million shares outstanding, so the offering would dilute the company's common stock by 8%.

Wynn plans to use the proceeds from the sale to help reduce its debt, but also to help fund an expansion -- announced late Monday -- to its 3,500-room Wynn Las Vegas casino, which is scheduled to open next April. The expansion, tentatively dubbed "Encore at Wynn Las Vegas," will be on 20 acres of land next to the existing site and is expected to open in 2007 with an estimated price tag of $900 million. It likely will include 1,500 hotel suites, additional casino space and restaurants, and convention and retail space.