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Stock downgraded

Friday, Feb. 1, 2002 | 11:16 a.m.

Banc of America Securities cut its rating on Park Place Entertainment Corp. from "buy" to "market performer," citing the stock's run-up over the last several months.

"Park Place's stock has soared 58 percent since its lows post-Sept. 11 and currently trades at 7.5 (times) and 7.2 (times) our revised 2002 and 2003 (cash flow) estimates, toward the high end of its historical range," gaming analyst J. Cogan wrote. "Current levels reflect the resiliency of (Park Place's) operations and near-term fundamentals, in our view."

Cogan said he believed there were long-term growth opportunities for Park Place, both in the United States and overseas, but that the benefits of these opportunities probably would not emerge until at least 2004. Until Park Place showed "better visibility" for future growth, investors could be unlikely to pay higher multiples for Park Place, he said.

Following the company's guidance earlier this week, Cogan lowered his 2002 earnings estimate by 25 percent to 40 cents per share, and his 2002 cash flow estimate by 2 percent to $1.1 billion. Earnings and cash flow growth should be "flattish" in 2003, Cogan said.

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