If the market cooperates and doesn’t head south yet again, then this note out yesterday from analyst Lawrence Klatzkin of Jefferies & Co. on Wynn Resorts (WYNN) should provide for a shift in momentum from the bears to the bulls, spur some short covering on oversold conditions and also help beleaguered shares of competitor Las Vegas Sands (LVS).

As reported by the Associated Press, Klatzkin believes the stock’s 16% slide since Dec. 10 should not frighten investors since the Las Vegas-based company will experience strong expansions in both Las Vegas and Macau. Wynn plans to open its $2.2 billion Encore casino-resort next to Wynn Las Vegas in 2009 and has 142 acres of Las Vegas land available for development.

In Macau, operations last month were expanded by adding 85 more gaming tables and 551 new slot machines. Further growth is expected there when Wynn completes construction of its $600 million Wynn Diamond Suites tower in 2010. An especially intriguing catalyst for Wynn shares is that it may receive a Japanese casino license. Japan has considered legislation that would allow gaming facilities to be developed there.

Klatzkin kept a “buy” rating on the stock though he lowered his price target to $147 from $152 as he revised his fourth-quarter profit estimate to $.69 from $.75 per share on lower Macau margins and competitive threats from Melco. With some of the steam taken out of the stock recently and the market now being more realistic in its expectations, the analyst comments could spark a decent tradable rally. Gaming stocks are beginning to prove just that; Wynn is currently higher by $1.52 to $106.02, while shares of Las Vegas Sands are up $.84 to $83.64.

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