NEW YORK (AP) -- Shares of Wynn Resorts Ltd. jumped Wednesday on speculation that the company might be close to signing a land deal that could pave the way for it to open another major resort in the Chinese gambling enclave of Macau.
THE SPARK: Nomura analyst Harry Curtis said that speculation about the deal for the island of Macau was stoked by a report in a local newspaper there, called the Jornal Tribuna de Macau.
The article said that Wynn Resorts may sign a land grant contract by the end of this month, which would open the door for a large casino and resort. Wynn already has two resorts in Macau; they generated $765 million in operating income last year.
Curtis seemed skeptical of the report. He said in a note to clients Wednesday that he was taking a "conservative" approach to the news because it didn't come from an official government source.
THE BIG PICTURE: Wynn has been seeking permission to build another Macau resort. Macau is a major resort and gambling destination that draws visitors from around Asia.
About 76 percent of Wynn's operating income came from its operations in China last year, when the U.S. casino industry continued its slow recovery from the recession.
Shares of Wynn jumped in March after the company accidentally filed a report with the U.S. Securities and Exchange Commission saying that it had made substantial progress toward getting the land grant in Macau. Wynn retracted the erroneous filing without explaining what happened. The mistaken filing said its Macau subsidiary had secured a 25-year lease to 51 acres of land in the region's Cotai area.
THE ANALYSIS: Curtis said closing the land deal in Macau is one of two key catalysts that could boost the company's stock price because it would show Wynn has room to grow.
The other possible catalyst would be resolving a legal dispute that has been escalating in recent months with the company's single largest shareholder, the Japanese tycoon Kazuo Okada. The dispute is related to the plans for expansion in Macau.
Curtis set a price target of $139 for Wynn's stock and attributed $16 of that to business in Cotai.
SHARE ACTION: Shares of Wynn Resorts were up $6.08, or 4.9 percent, to $130.85 by late afternoon.
The stock remained below its high for the past year of $172.58, reached last summer. But it is trading well above the levels of 2009 and 2010, when consumers cut back sharply on resort stays and gambling trips. Shares of Wynn Resorts dipped below $16 in March 2009.