Gambling stocks got some good news on Wednesday, as analysts made positive remarks in reaction to the Global Gaming Expo, or G2E, which kicked off on Monday in Las Vegas.
Goldman Sachs, which hosted the Gaming Investment Forum in Las Vegas on Tuesday, told investors that investment interest in the sector is high and that business trends seem strong.
"The two major themes
from the G2E were, one, the strengthening of Las Vegas trends that were seen during the summer are carrying over to the fall, with casino managements seeing stronger room rates, better occupancy and more convention traffic than last year -- all positive signs," said analyst Steven Kent. "And two, the slot manufacturers unveiled their new lines of games with huge lines at the booths. ... We think that the stock and earnings momentum of the Vegas operators may continue."
Other analysts were similarly upbeat about Las Vegas fortunes. Lehman Brothers raised price targets and earnings estimates above Wall Street estimates for three Las Vegas-based casino chains, while lowering estimates on casinos with more exposure outside the City of Sin. Analyst Joyce Minor told investors that news from the G2E was mostly positive, with faint signals emerging that gaming revenue could join room rates in adding strength to earnings.
"We generally heard incremental improving news from Las Vegas," said Minor. "Nongaming revenues continue
to be strong in September as they have in the summer, and though gaming revenues still lag, they seem to be slowly improving in concert with some of them better economic news we've heard recently."
Minor raised her third-quarter earnings estimate on
to 37 cents a share, topping current Wall Street estimates by a penny. She established a new price target of $42. She also raised
Mandalay Resort Group's
third-quarter estimate to 65 cents a share, 5 cents above current consensus, and set a new price target of $35.
Park Place Entertainment
rounded out the trio, with Minor raising third-quarter estimates to 17 cents a share, a penny higher than the consensus.
But companies with more exposure to gaming in Illinois, where the state legislature recently increased taxation, or in parts of Atlantic City that have been negatively affected by the debut of the Borgata Casino, face a bumpier road.
As a result, Minor cut her third-quarter earnings estimate on
to 94 cents from 96 cents, which is still 4 cents above current Wall Street expectations. She also lowered her third-quarter estimate on
Penn National Gaming
to 40 cents, matching Wall Street consensus.
Mandalay was up 13 cents, or 0.3%, at $39.81, while Park Place was up 14 cents, or 1.6%, at $9.16. MGM Mirage was off 19 cents, or 0.5%, at $36.60.
International Game Technology
shares were up 31 cents, or 1.1%, at $27.56, after the company announced late Tuesday that it was boosting its quarterly dividend to 10 cents a share. Overall, gaming stocks were stronger on Wednesday, with the Dow Jones Casino Index up 0.7%.