Las Vegas Gaming: Let It Roll

Although Wall Street analysts are bullish on gaming fundamentals, some are expressing concern about valuations. Caution is implicit, for example, in the hold rating and $75 price target Citigroup Smith Barney analyst Michael Rietbrock has on MGM Mirage. (Citigroup Smith Barney does and seeks to do business with companies covered in its research reports.)

In a research note, Rietbrock commended MGM Mirage on a "strong" quarter, but posited that Las Vegas operating momentum may be "as good as it can get." He added that there may be growing investor anxiety surrounding Wynn Resorts' Las Vegas grand opening and the business it might pull away from MGM Mirage.

Analysts are also cautious about the valuation of Las Vegas Sands, whose shares are trading around $47 -- more than 60% above the $29 price of the company's December initial public offering.

Merrill Lynch's Anders initiated coverage on the stock with a neutral rating late last month, saying he saw limited upside to the stock's fair value, which he posits at $47.

That said, Anders believes that Las Vegas Sands will be one of the "most exciting growth stories in the gaming industry" in the next few years. "Under the astute business mind of Sheldon Adelson, the company is increasing its presence in two key markets: Las Vegas and Macau," he wrote.

Still on tap are fourth-quarter earnings releases from Boyd Gaming (BYD) and Caesars next Wednesday and Thursday, respectively.

Analysts estimate Boyd's fourth-quarter EPS at 37 cents on $523.7 million in revenue, according to Thomson First Call. Caesars is expected to report EPS of 8 cents and revenue of $1.03 billion.

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