Harrah’s forecast lowered

Wednesday, Jan. 12, 2000 | 10:56 a.m.

An analyst at Wasserstein Perella Securities is lowering his earnings estimates on Harrah's Entertainment Corp. of Las Vegas, citing poorer-than-expected initial results at Harrah's new casino in New Orleans.

Analyst William Schmitt dropped his 2000 earnings estimate on Harrah's by 9 cents per share, to $1.76. Earnings estimates for 1999 were dropped 1 cent per share.

The Harrah's New Orleans casino posted November revenues of $16.3 million, well below analyst projections of $22 million to $24 million. Although trends are improving, the analysts note that projections of $360 million per year "appear unrealistic." Schmitt now projects revenues of $281 million for the property in 2000, rising to $324 million in 2001. Schmitt projects cash flow of $19.9 million in 2000, rising to $53.1 million in 2001 and $65.1 million in 2002.

Lowered New Orleans revenues should be partially offset by improving results at Harrah's properties in Atlantic City and Joliet, Ill., Schmitt said. Harrah's Joliet is benefitting from new dockside gambling laws in Illinois, he noted, and should see revenue of $221.8 million in 2000, up from initial estimates of $203.7 million.

Despite the lowered estimates, Schmitt maintained a "strong buy" rating on Harrah's, with a 12-month price target of $35.