An analyst at Janney Capital Markets, Brian McGill, downgraded the casino operator to sell from neutral on Tuesday; he believes the Las Vegas market will take longer than expected to recover.
Though investors seem to sense that Las Vegas's off-strip casinos will see business return to 2004-2007 levels "at some point," the bearish McGill doesn't think so, he wrote in a note to clients.
"After looking at various population, employment, type of employment and housing numbers, we have concluded that revenues are likely to stay at a depressed level for quite some time going forward," the analyst wrote.Things aren't looking much better on the other side of the continent. The implementation of table games in Pennsylvania could put pressure on Boyd's Borgata casino in Atlantic City, and the eventual addition of slots at New York's Aqueduct could also cut off some traffic to the New Jersey gaming center. Shares of Boyd finished trading Tuesday at $11.89, down $1.28, or 9.7%. The only two positive catalysts for Boyd, according to McGill, are if the company gains MGM Mirage's (MGM) half of the Borgata casino and/or Station Casino's assets. Other regional gaming outfits also fell on the analyst's Las Vegas outlook. Isle of Capri Casinos (ISLE - Get Report) declined 6.7% to $9.29 and Ameristar Casinos (ASCA) lost 2.2% to $17.62. But while Las Vegas remains a gamble, Macau continues to look like a sure-fire bet. In May, gaming revenue generated by the Chinese gambling enclave nearly doubled, coming in somewhere between $2.13 billion and $2.25 billion, the region's steepest year-over-year gain on record.