Stormy Weather at Mandalay Bay

Meanwhile, Robin Farley, an analyst at UBS, contends that Mandalay's poor quarter could give investors pause about current casino stock valuations.

"Not only have gaming valuations moved to the top end of the historic range in recent quarters, but valuations have also been extended by giving operators value for undeveloped land and/or projects that could open several years out, rather than just valuations based on recurring cash flows that already exist," she wrote in a research note. "Those valuation levels could be challenged by a major earnings miss like this." (UBS does and seeks to do business with companies covered in its research reports.)

Despite those broader concerns, Farley is keeping her MGM Mirage estimates unchanged for the time being. She cited statements from MGM management that the first quarter's heavy rains have not affected guidance for a 10% increase in first-quarter revenue per available room, or revpar. Farley also noted the recent opening of a new hotel tower at the Bellagio would bolster the MGM Mirage's revpar significantly by increasing its mix of higher-priced rooms.

"While MGM Mirage may react negatively on Mandalay's results, we feel comfortable that MGM Mirage's first quarter will turn in a solid quarter based on convention business, as well as high-end play during Chinese New Year and the Super Bowl," Farley wrote.

Other analysts are dismissing any broader implications of the Mandalay results, however. Bear Stearns' Joseph Greff argued rain had a disproportionate effect on Mandalay, because it is more dependent on drive-in traffic from Southern California than other Las Vegas properties. (Bear Stearns does and seeks to do business with companies covered in its research reports.)

Although Greff called Mandalay's results "disappointing," he said his own checks with industry sources suggest that other Las Vegas Strip casinos have had more robust business than Mandalay.

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