New analyst coverage positive for casinos

Tuesday, Dec. 5, 2000 | 10:47 a.m.

Investment brokerage First Security Van Kasper today initiated coverage of the gaming industry, saying that "supply and demand dynamics (in the industry) remain attractive."

Analyst David Barteld initiated coverage with buy ratings on MGM MIRAGE, Station Casinos Inc. and Aztar Corp. Barteld set a price target of $43 for MGM MIRAGE, $25 for Station Casinos and $21 for Aztar.

Barteld also assigned an accumulate rating to Anchor Gaming Inc., with a price target of $48. He also initiated coverage of Boyd Gaming Inc. with a hold rating. He assigned a strong buy rating to International Game Technology, setting a price target of $60.

In his report, Barteld noted that the gaming industry "is becoming high tech," creating investment opportunities.

"Industry consolidation has been good for investors in recent years, but new technologies have the potential to change the way people gamble and should enable casinos to operate more profitably," Barteld wrote.

Barteld also expressed confidence in the Las Vegas market, even as gaming expands nationally.

"As the number of gaming venues in the country increases and gaming expands, we think gaming operators will be forced to acquire a more regional or local market focus," Barteld wrote. "The growing acceptance of gaming as a 'leisure activity' should fuel long-term growth of gaming enthusiasts and new gaming jurisdictions."

Last week, brokerage firm Gerard Klauer Mattison & Co. also initiated coverage of the gaming industry with four companies.

Gerard analyst Jeffrey Logsdon assigned buy ratings to Harrah's Entertainment Inc., Mandalay Resort Group and MGM MIRAGE. Logsdon set a 12-month price target of $35 for Harrah's, $26 for Mandalay and $36 for MGM MIRAGE.

Logsdon also assigned an outperform rating to Park Place Entertainment Inc., with a 12-month target of $17.

Meanwhile, gaming stocks held steady on Wall Street Monday despite a downgrade of the lodging sector by a prominent analyst.

Jason Ader, gaming and lodging analyst with Bear Stearns, downgraded the entire lodging sector "in response to growing weakness in the U.S. economy." Ader downgraded six lodging stocks, including Marriott International, Hilton Hotels Corp., Starwood Hotels and Resorts and Four Seasons, and noted that growing fears that a recession could be imminent could drive lodging stocks lower.

Ader's downgrade did not extend to the gaming industry.

On Monday, Mandalay closed at $20.81, unchanged; MGM MIRAGE dropped 25 cents to $29.88; Park Place closed at $13.31, off 25 cents; Harrah's fell 31 cents to $28.13; and Station dropped 25 cents to $18.31.

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