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Ameristar Casinos(ASCA) should benefit from the stabilization of overall regional gaming revenue.
Greff foresees regional gaming revenue growing in the low-to-mid-single digit range in 2011 and strengthening in 2010.
Nonetheless, he lowered his first-quarter revenue and EBITDA estimates for Ameristar, citing softer-than-expected results at St. Charles and East Chicago. His revised estimates also take into account lackluster January gross gaming revenue, which was hampered by inclement weather across most of Ameristar's jurisdictions, as well as sluggish February results. Greff does not believe this weakness can be fully offset by strength in March.
"We continue to maintain our neutral rating as we believe the stock will remain range bound in the near-to-mid term," he wrote in a note. "While we believe upside in shares is limited given the lack of long-term growth drivers, we think shares have reached a bottom and have support near these levels given Ameristar's free cash flow yield."
But Ameristar was upgraded on Wednesday by Morgan Joseph to buy from hold.
The regional casino operator is scheduled to report its first-quarter results on May 4, and analysts are expecting a profit of 29 cents a share on revenue of $305.3 million.