Wynn Resorts Stock Breakout Turns Up Heat on Doubters

M&A chatter continues to spur Wynn Resorts stock to fresh highs, but analysts aren't yet convinced

Mar 21, 2017 at 9:49 AM
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Casino stock Wynn Resorts, Limited (NASDAQ:WYNN) recently broke out above a trendline connecting a series of lower highs since last September -- a pattern that often results in trending behavior. The shares are also trading well above the $104 level, which served as resistance in mid-2015, and again through much of 2016. Fueling some of the stock's recent gains has been a round of M&A chatter, which a spokesperson for the company has denied, but which could resurface in the future, giving WYNN another lift. With the shares up 27% year-to-date, this looks like an opportune time for bulls to enter, with our target in the $125 region representing half the stock's all-time high.

170317WYNN

Despite the stock's recent gains, analysts have yet to upwardly revise their opinions on WYNN. Of 14 brokerage firms providing coverage, 10 rate the shares a "hold" or "strong sell," leaving plenty of room for future upgrades, which could be a boon for the shares.

Meanwhile, short sellers have been in covering mode in recent months, since these bearish bets topped out along with the stock in September. But nearly 10% of WYNN's available float remains dedicated to short interest, indicating there's buying power left to fuel the next move higher.

It's an unusually appealing time to purchase premium at the moment, too. WYNN's Schaeffer's Volatility Index (SVI) of 29% is seated below 94% of all readings from the past 12 months, indicating near-term options are currently well-priced, from a volatility point of view. Last but not least, our recommended call option has a leverage ratio of 7.1, meaning it will double in value on a 13.9% rise in the underlying shares.

Subscribers to Schaeffer's Weekend Series service received this WYNN commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Series is one of our most popular trading services.
 

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