Research firm Aegis Capital upgraded Wynn Resorts (WYNN) to Buy from Neutral, saying that the company is well-positioned to benefit from a recovery in gambling in the Chinese region of Macau.

MACAU RECOVERY: The rebound in gambling in Macau has been led by VIP and upper end non-VIP gamblers, wrote Aegis analyst David Bain. Among the factors that are fueling the rebound in Macau are a slight easing of Beijing's anti-corruption campaign, new, higher end casinos in Macau, and the extension of new credit, the analyst wrote. The rebound in VIP gambling revenue in Macau will probably continue, wrote Bain, who predicted that Macau's total gross gaming revenue would rise 10% in Q1 versus the same period a year earlier.

WYNN PALACE: Wynn's casinos in Macau have greater leverage to VIP gamblers than their competitors, the analyst stated, adding that Wynn has made "favorable" changes to Wynn Palace that have made it more attractive to VIP gamblers. Moreover, new hosts hired by Wynn have enabled the company to obtain more revenue from upper end non-VIP gamblers, and changes it has made to its gaming floor have been effective, while the appearance of the light rail system near the casino has been improved, the analyst stated.

ESTIMATES TARGET: Bain raised his 2017 estimate of earnings before interest, taxes, depreciation and amortization for the company to $1.44B from $1.43B and increased his 2018 EBITDA estimate to $1.52B from $1.48B. He believes that analysts' EBITDA estimates for the company could rise, and he increased his price target on Wynn shares to $121 from $95.

OTHERS TO WATCH: Other publicly companies that own Macau casinos include Las Vegas Sands (LVS), MGM Resorts (MGM), and Melco Crown (MPEL).

PRICE ACTION: In morning trading, Wynn added 0.5% to $112.18 per share.