Mirage stock rating cut

Friday, Oct. 22, 1999 | 11:51 a.m.

Mirage Resorts Inc.'s stock rating was cut to "hold" from "buy" by Credit Suisse First Boston gaming analyst David Anders after the company posted lower than expected third-quarter earnings.

Anders said he cut his estimates for 1999 and 2000 per-share net because Mirage's two newest properties -- Bellagio and Beau Rivage -- are posting higher operating expenses and lower cash flows than projected.

The rating was also trimmed because Anders has "a low level of conviction" in current earnings estimates, pegged at 68 cents a share for 1999 and 88 cents a share for 2000. Anders had previously cut his 2000 earnings estimate from $1.20 a share to the 88-cent level.

Anders' lack of confidence in the latest estimates stems from "the minimal guidance" provided by Mirage Resorts executives on the conference call with analysts to announce third-quarter results.

Mirage Resorts has stopped providing property by property results, saying to do so gives competitors too much information. Analysts need such information, however, to measure the performance of specific hotel-casinos.

Anders also expressed concern over the possibility Mirage will spend $3 billion to develop new resorts in Atlantic City and Las Vegas in the next few years. He cited "high levels of uncertainty" over the potential return on such investments, adding, "We believe the stock will have a difficult time outperforming the market."