Wednesday, April 20, 2005 | 10:48 a.m.
Shares fall after analyst downgrades stock
Shares of Wynn Resorts Ltd. fell nearly 6 percent in early trading today, dragging down shares of the major Strip casino operators, after Merrill Lynch downgraded the company's stock.
Merrill Lynch analyst David Anders downgraded shares to "sell" from "neutral," calling the company's balance sheet "exhausted" and the stock "expensive."
"Given Wynn's nearly $5 billion in announced capital projects since its IPO, we believe the balance sheet is nearly exhausted," Anders wrote in a research note to investors today.
"This may preclude the company from pursuing large additional developments without the issuance of meaningful amounts of equity."
Based on 2008 results at the upcoming Wynn Las Vegas resort and its neighboring Encore resort, the stock is trading at a price that's more than 10 times the company's earning power, Anders said.
"We believe it is important to note that valuations that appear reasonable in today's robust gaming market could appear excessive if the market softens," he said.
But in a separate report today, Prudential Securities stock analyst Bill Lerner said Wynn shares are "cheaper than it may appear" and that he didn't believe the company would need to raise additional equity to pursue future projects.
Wynn Resorts shares fell 5.7 percent to $55.83 in mid-morning trading.
Shares of Station Casinos Inc., Las Vegas Sands Corp., MGM Mirage, Harrah's Entertainment Inc. and Boyd Gaming Corp. also each fell more than $1 per share this morning.
Casino merger still possible
Talks over the possible merger of a proposed state-tribal casino and a casino at Canterbury Park racetrack will continue -- even without the participation of one of the state's tribal partners, Gov. Tim Pawlenty said Tuesday.
Leaders of the Leech Lake Band of Ojibwe, up until now one of three northern Minnesota tribes collaborating with Pawlenty's office to push a state-tribal casino in the Twin Cities, said Monday they weren't interested in proceeding if it was combined with a separate proposal to allow a casino at Canterbury Park.
Pawlenty and some gambling supporters have raised the possibility of the merger, hoping it might sweeten the deal for state lawmakers uneasy about proceeding with one proposal and leaving the other behind.
"Leech Lake's decision to pull out of any potential partnership at Canterbury Downs is disappointing," Pawlenty said. "But there are other tribal partners who are interested, and we're continuing to have those discussions."
Ethics probe sought for AG
A Sonoma County community group asked a state ethics commission Tuesday to probe campaign contributions Attorney General Bill Lockyer accepted from backers of an Indian casino he regulates and once opposed.
In a complaint to the Fair Political Practices Commission, the Alexander Valley Association alleged that the contributions influenced Lockyer's decisions about the River Rock Casino.
A spokesman for Lockyer denied the allegation.
Lockyer opposed the casino in 2002 and questioned the legal status of the Dry Creek Rancheria band of Pomo Indians.
Lockyer's legal interpretation that the casino, which operates under a compact with the state, was illegal would have affected Indian gambling statewide if it had stood.
But he retracted his legal opinion two days later, saying the issue needed more study, and he never issued a final opinion. Nor did anything come of his efforts to halt construction of the casino housed in a circus tent-like structure overlooking the valley's scenic vineyards 75 miles north of San Francisco.
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