Casino stocks upgraded on Circus report

Tuesday, May 4, 1999 | 12:25 p.m.

Stock prices of several big Las Vegas casino operators increased Monday after Circus Circus Enterprises reported strong business at its Strip properties.

And analysts Monday increased their ratings on several gaming concerns.

Circus Circus was raised to "buy" from "hold" by analyst Dennis I. Forst at McDonald Investments Inc. His 12-month target price is $30.00 per share.

Circus was raised to near-term "buy" from near-term "accumulate" by analyst Naomi Talish at Merrill Lynch & Co. Her 12-month target price is $29.00 per share. The long-term rating remained "buy."

Circus was raised to "buy" from "hold" by analyst David Anders at Credit Suisse First Boston Inc., who also raised Harrah's Entertainment Inc. to "strong buy" from "buy" and Park Place Entertainment to "strong buy" from "buy."

And Boyd Gaming was raised to "strong buy" from "buy" by analyst William Trent at JWGenesis Capital Markets. The 12-month target price is $9.00 per share.

Las Vegas-based Circus said it expects profit from operations to be 68 percent higher than analysts estimated for its first quarter.

"It reminds people of the power of room-rate increases," said Prudential Securities analyst Joseph Coccimiglio. "There's really no cost to raise room rates. It almost all goes to the bottom line."

Coccimiglio said the companies are also benefiting from an easy comparison to last year's results, when the group reported poor results. He said low demand for the Las Vegas resorts last year resulted in slashed room rates and undercut earnings.

Circus Circus also said it's had a "good start" at its new Las Vegas Strip casino Mandalay Bay, which opened March 2. It predicted profit from operations for the company to be 40 cents to 42 cents a share for the quarter ended April 30.