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Las Vegas Gaming: Let It Roll

Anders maintains buy ratings on both Harrah's and MGM Mirage, and his 12-month price targets on the stocks -- $80 for Harrah's and $83 for MGM Mirage -- remain significantly higher than the stocks' recent levels around $66 and $76, respectively. (Merrill Lynch does and seeks to do business with companies covered in its research reports.)

The continuing Las Vegas boom prompted Anders to significantly increase earnings estimates for MGM Mirage. His 2005 EPS forecast is now $3.05, up from $2.89, and he lifted his 2006 estimate to $3.77 from $3.56. The average Wall Street estimates are $2.73 for 2005 and $3.36 for 2006, according to Thomson First Call.

"We expect MGM to continue to benefit from increased Las Vegas visitation in the first quarter and ultimately in the second quarter, as the opening of Wynn should drive leisure travel," Anders wrote. "In addition, the convention calendar remains firm."

Anders was referring to the ultra-luxurious flagship Wynn Resorts (WYNN - Get Report) casino, which is set to open at the end of April. Visitors curious to see the new resort may also bring business to other Las Vegas addresses.

Meanwhile, Anders' counterpart at Bear Stearns, Joseph Greff, is big on Harrah's. This week, Greff raised his price target on the stock to $82 from $80 and reiterated his outperform rating. (Bear Stearns does and seeks to do business with companies covered in its research reports.)

In a research note, Greff said that Harrah's currently trades around 7.9 times his 2006 pro forma EBITDA estimate, or earnings before interest, taxes, depreciation and amortization, "a compelling value in our view."

Greff also believes Harrah's acquisition of Caesars will be a winner. "Harrah's stronger operating model should generate improved operating results for the traditionally underperforming Caesars' properties," he wrote. "There should be meaningful cost savings over time as well. Importantly, Harrah's gains an immediate, additional Las Vegas presence, increasing its Strip exposure to 32% of total EBITDA, vs. 20% currently."

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