The shares of casino owner Wynn Resorts (WYNN) are climbing after research firm Argus upgraded the stock to Buy from Hold based on improvements seen in the Chinese region of Macau.

MACAU REBOUND: The results of the company's Wynn Palace in Macau have shown "consistent improvement," as its occupancy and room rates increased in the fourth quarter, reported Argus analyst John Staszak. Meanwhile, Macau's gross gaming revenue has risen for the last eight months, and the VIP gambling market there has rebounded more quickly than Argus had predicted, the analyst said.

ESTIMATES, TARGET: Wynn's earnings growth should accelerate over the next two years, and its stock is undervalued, the analyst stated. Staszak increased his 2017 earnings per share estimate for Wynn to $4.30 from $4.20 and raised his 2018 EPS estimate for the company to $5 from $4.80. He set a $135 price target on the name.

MACAU OUTLOOK: Macau's recovery should continue for the rest of the year, driven by new cruises of VIP customers to the region and marketing initiatives meant to attract non-VIP gamblers there, Staszak believes.

OTHERS TO WATCH: Other Macau casino owners include Las Vegas Sands (LVS), Melco Resorts (MLCO), and MGM Resorts (MGM).

PRICE ACTION: In morning trading, Wynn rose 0.8% to $117.66.