Wall Streeters predict big welcome for Sands’ IPO

Dec 14, 2004 6:30 AM

With most of Wall Street gushing over its prospects, it was no wonder that Las Vegas Sands Inc. (LVS) last week boosted its initial public offering (IPO) price from the original $20 to $22 to $24 to $26 per share.

Even at that, few analysts believed that the price would not rise from there. Especially, they noted, after watching the rise of the share price of Wynn Resorts Ltd. that originally hit the market at $13 a share and within the following two years, despite not having any earnings to report, the price rose to the mid-$60’s.

In fact, CBS MarketWatch, quoting Renaissance Capital, which runs the IPO Plus Fund, Las Vegas Sands is the "IPO of the week."

"With a strong operating history and growth potential in Las Vegas and in Asia’s Macau, Las Vegas Sands could offer a significant payout for those investors willing to play a hand," Renaissance Capital said in its report.

And, Scott Reeves, writing for Forbes.com, noted that Las Vegas Sands "is a good bet to open strongly and perform well in the aftermarket." He added that, "it’s a profitable company in a solid sector."

Analysts also were quick to point out that gaming stocks have easily outpaced other industries during the past few quarters and the trend, especially in Las Vegas, has boded well for continued growth.

Although a date wasn’t officially set for the IPO, it was expected that the shares might begin trading as early as Tuesday, Dec. 14.

A WYNN move

Wynn Resorts Ltd. (WYNN) got another boost on Monday when its shares were listed on the Nasdaq-100 Index.

In strong trading throughout the day, the share price rose by $1.48 to close at $65.58, just shy of its intra-day high.

The Index, a popular form of investing for those who want to participate without having to single out individual companies, lists 100 non-financial stocks.

Revenues gain

October turned out to be a bonanza for Nevada’s casinos with reported near-record revenues of $9.24.9 million, a 12.9% increase over October 2003.

State officials cited a huge increase in baccarat play as the primary reason for the increase in gaming win.

Table games were up 31% while slots increased by 4.4%, officials said.

Baccarat play, primarily at Strip casinos in Las Vegas, generated $57.1 million, a jump of 160% over the previous year, helping the Strip properties to boost their revenues to $491.9 million of total win during October. This was an increase of 20.3% over last year.

Failing to participate in the October increases were the downtown Las Vegas casinos that barely matched revenues from the previous year while North Las Vegas was up 5.4% and the Boulder Strip, plus 7%.

Revenues fall

Despite the strong draw of The Borgata Hotel/Casino Resort, gaming revenues for Atlantic City’s casinos fell by 1.1% during the month of November.

State officials blamed the decline on the month having fewer weekend days.

They said that casino gaming revenue was $375 million, down from last year’s $379.2 million.

Showing the biggest gain during the reporting period was The Borgata with an increase of 21.4%. The property is half-owned by Boyd Gaming Inc. (BYD) and MGM MIRAGE Inc. (MGG) but is operated by Boyd Gaming.

Also showing a substantial gain was the Resorts Hotel/Casino that was up 16.3%, reflecting the impact of a new tower the company opened in July.

Shuffling up

Shares of Shuffle Master Inc. (SHFL) declined on Friday even though the company reported soaring profits for the fiscal fourth quarter. Causing the share price to drop was the company projection for the first quarter of the new fiscal year in which it said earnings per share would be between $0.21 and $0.23 while the consensus of analysts had estimated earnings at $0.25.

The company said quarterly income rose to $6.5 million from last year’s $5 million while revenues jumped 48% from $17.6 million to $25.9 million.

For the fiscal year, the company had earnings of $24.1 million or $0.97 per share, easily topping last year’s earnings of $16.9 million or $0.66 per share.

The company also announced that the directors had approved a 3-for-2 stock split with shares being issued on Jan. 14 to shareholders of record on Jan. 3.

Takeover approved

Shareholders of Mandalay Resort Group (MBG) spent little time last week in approving the proposal by MGM MIRAGE Inc. (MGG) to take over the company for $4.8 billion in cash. The acquiring company also will assume $2.5 billion in debt as well as $600 million in convertible debentures.

The move will give MGM MIRAGE annual revenues of about $6.5 billion and control of 28 properties in five states, Nevada, New Jersey, Illinois, Michigan and Mississippi.

Assuming this deal and that of Harrah’s Entertainment Inc.’s (HET) takeover of Caesars Entertainment Inc. (CZR) are approved by the Federal Trade Commission, the MGG/MBG combination will be the second largest gaming company in the world, behind HET/CZR.

THE INSIDER: Curtis A. Sampson, founder and chairman of Canterbury Park Holding Corp. (ECP) has filed the necessary forms with the SEC indicating he will be selling 110,000 shares of the company’s common stock. That will leave him with 975,000 shares.

Scientific Games Corp. (SGMS) has selected NCR Corporation (NCR) to develop what is being called the next generation user interface for the company’s terminals in its pari-mutuel race betting systems.

Roth Capital analysts have downgraded the shares of Shuffle Master Inc. (SHFL) from "buy" to "neutral."

The mayor of Cleveland, Ohio, ranked by the U.S. Census Bureau as the nation’s poorest big city, will seek a change in the state constitution to permit the city to offer casino gambling.

Citing an error by the Bureau of Indian Affairs, three Connecticut congressmen have joined the state’s attorney general in petitioning Interior Secretary Gale Norton to reverse the BIA decision granting federal recognition to the Schaghticoke Indians.

The growing controversy involving the Jockeys Guild expanded last week with the announcement that the Thoroughbred Racing Association, the group that represents a majority of North American horse tracks, has called for an explanation of how its $2.2 million contribution to the Guild is being spent.