Analyst upgrades MGM Grand stock

Tuesday, May 25, 1999 | 1:08 a.m.

Strong operating results at the Las Vegas MGM Grand hotel-casino in the fourth and first quarters prompted Wall Street analyst Harry Curtis of BancBoston Robertson Stephens to upgrade MGM Stock to a buy from a long-term attractive rating.

Curtis raised his second quarter 1999 earnings per share estimates to 42 cents from 39 cents, and his 1999 annual EPS estimate from $1.60 to $1.70. Curtis increased his estimate of 2000 earnings before interest, taxes, depreciation and amortization -- EBITDA or cash flow -- from $450 million to $475 million, and 2000 EPS to $2.25 from $2.09. The consensus MGM EPS estimate for 2000 is $1.96.

Standard & Poor's last week affirmed its triple-B-minus rating on MGM's debt, and revised its rating to stable from negative. S&P cited strong operating results over the past two quarters, improved operating trends in Las Vegas, cancellation of the company's Marriott hotel expansion, further delays in its Atlantic City plans, and the stock-financed acquisition of Primadonna Resorts Inc. earlier this year.

MGM has "virtually completed" its Las Vegas expansion and is only a few months away from opening a temporary casino in Detroit, said S&P.

"In conjunction with these events, the company's stock price has risen significantly, mitigating the risk of further share repurchases over the near term," stated S&P in a release.

MGM Grand stock has risen from a low of $22.56 in October to $49.63 earlier this month. The stock was down $1 in mid-day trading today to $43.