Stock rated ‘strong buy’

Friday, Jan. 25, 2002 | 11:06 a.m.

MGM MIRAGE stock rose more than 4 percent Thursday in heavy trading, after brokerage firm Merrill Lynch raised its rating on the Las Vegas company to "strong buy."

Merrill Lynch had had a "buy" rating on the stock. It established a $38 price target for the stock.

"Given the events of 9-11, we believe that investors have become nearly obsessed with weekly and monthly performance figures to the detriment of the long-term investment merits of certain securities," gaming analyst David Anders wrote. "In our view, this has been the case for MGM. Although uncertainty does surround near term earnings ... we believe MGM's management team has taken significant steps to create long-term shareholder value, which should be realized over the next nine to 12 months."

Anders cited four factors for his upgrade: first, steadily improving business trends in the Las Vegas market; second, the lack of new resorts on the Las Vegas Strip until 2005; third, MGM MIRAGE's growth opportunities, which include the 50 percent-owned Borgata in Atlantic City, as well as land tracts available for development in Atlantic City and Las Vegas; and fourth, MGM MIRAGE's "wild cards" for possible growth, which include Chicago, Macau, the United Kingdom, and an Internet gaming license issued to MGM MIRAGE by the Isle of Man.

MGM MIRAGE rose $1.27 Thursday to $31.12. The stock was up another 25 cents this morning.