On January 19th, 2009, shares of most casino gaming operators appreciated as the broader market improved and a KeyBanc Capital Markets analyst stated that there is a good cause for optimism about some gambling companies. KeyBanc Capital Market analyst Dennis Forst said that the operating casino environment has rarely been in worse condition than it is now. Casino revenues has slide down as players cut back on their gaming spending. Some casino operators have also canceled or postponed some development projects as financing has become more difficult to obtain.
Las Vegas casino facilities have also been affected from the cutbacks to airline flights into the city. Forst said that he does not expect conditions to improve for the rest of the year. But he added that they see some valuable reasons for optimism for a select few stocks based on improving balance sheets and small valuations. Forst has "buy" recommendations on the Ameristar Casinos Incorporated, MGM Mirage and Penn National Gaming Incorporated. Forst said that all three gaming organizations are dealing discounts to their peer groups.
Forst expressed confidence that MGM has fulfilled its massive financial requirements for the next year, and that includes the finalization of its $9.2 billion dollars CityCenter development on the Las Vegas strip and debt maturities of $1.3 billion dollars. Forst expects the company to sell its assets to raise more cash if necessary. Although the present business conditions are poor, Forst said that the company is in a good position on the Las Vegas strip. Forst said that he is also happy about the debt position of Ameristar, a regional casino facility operator. Forst also expects the company to get a needed push when Colorado's gaming towns started implementing the changes from the Amendment 50.
Forst noted that there is also an ongoing speculation about the future sale of the company. Forst said that Penn National Gaming has a good balance sheet and liquidity. He added that the organization has no existing debt maturities and is finishing all its major capital expense gaming projects by the middle of 2009.
02/25/2009 19:39 PM