Wall Street analyst John DeCree tried to quell the initial speculation that Tilman Feritta’s becoming Wynn Resorts largest shareholder is anything more than an investment for now.

Shares of Wynn popped 9% Thursday after news that Fertitta increased his stake in the company to 9.9%, up from 6.1%. Wynn stock closed Friday at $90.74 after reaching the mid-$90s on Thursday, up from the mid-$80s the day before.

DeCree wrote Friday in a note to investors that although the stock purchase was disclosed in an SC 13G/A filing as a passive investment, media speculation about possible activism or a takeover attempt quickly ensued.

The billionaire owner and CEO of Houston-based Fertitta Entertainment is now the largest shareholder in Wynn Resorts, displacing Elaine Wynn, ex-wife of founder Steve Wynn.

“We can appreciate the speculation, particularly given Fertitta’s M&A track record, including the acquisition of Morton’s Restaurant Group and McCormick & Schmick’s, both of which started with 13G filings and culminated in full takeovers,” DeCree wrote. “However, Wynn would be a more complicated and expensive endeavor, given its sizable enterprise value and international gaming licenses (Macau and a resort under construction in the UAE).”

DeCree wrote mentioned speculation that Fertitta, who plans a luxury resort on the Las Vegas Strip, could be unhappy with the company’s share price. The analyst pointed out that Wynn, however, has generally outperformed its peer group over the past year. Prior to the 13G filing, Wynn shares were down only 1.5% over the past year, compared with Las Vegas Sands (down 1.9%) and MGM Resorts International (down 6.8%).

“Wynn shares are also up about 70% since Fertitta first purchased his initial stake in 2022,” DeCree said. “At that time, we wrote that Fertitta’s investment could become strategic if a unique situation arose, such as a failed concession rebid in Macau. We view his recent move similarly, as an attractive value investment that could become strategic if a unique situation arises, such as an unfavorable economic cycle that results in further dislocation in the shares.”

Wynn shares have been undervalued like much of the gaming group, and Fertitta was able to buy an incremental 3.8% stake in some of the most iconic gaming assets in the world for less than 8x 2024 EBITDA, DeCree wrote.

“This is a bargain, especially compared with the 10x multiple he would likely need to pay for a single standalone regional casino today or the $3-billion-plus likely needed to develop his proposed casino resort on the Strip. Although this looks like a fundamental investment, we struggle to immediately see any unique strategic alternatives Fertitta could bring to the table.”

Some of the ideas that surfaced include a strategic merger with Landry’s/Golden Nugget, monetizing the Wynn’s real estate, exiting Macau, or expanding the brand across the U.S.

“If Fertitta were to make a move, it would likely need to be an outright bid for the company, given the complexities of the board and fragmented shareholder base that would make a proxy fight difficult,” DeCree said.