If Wall Street investors are relying on analysts to help them decide on buying or selling a gaming stock, they are understandably confused. At least that’s the atmosphere being generated by conflicting reports.
Ameristar Casinos Inc. (ASCA) is a good example.
Following the announcement that the company had agreed to buy an East Chicago, Ind., casino from Resorts International Holdings LLC for $675 million, Larry Klatzkin of Jefferies & Co. advised clients that he was upgrading his rating on the stock from "hold" to "buy."
"We believe the East Chicago acquisition in addition to other existing expansions give Ameristar sizable upside," Klatzkin wrote in a clients’ note.
But Standard & Poor’s Ratings Services took a different view and lowered its outlook to "negative" from "stable" because it expects Ameristar’s credit measures will be "somewhat weak" during the intermediate term.
"Management has previously indicated its intention to aggressively grow the company, setting the goal of doubling its size in the next three to five years. With the East Chicago transaction, Ameristar has little room to accomplish additional debt-funded transactions within the current rating," S&P said.
The Resorts facility is owned by Colony Capital which acquired the riverboat as part of a three property deal with Harrah’s Entertainment Inc. (HET).
Then there is Progressive Gaming International Corp. (PGIC) whose attempt to reorganize has been hampered by its inability to receive the necessary approvals for its most innovative products.
That caused Goldman Sachs analysts to downgrade the stock last month to "sell" from "neutral."
However, Eric Wold, the analyst for Merriman Curhan Ford initiated coverage of PGIC last week with a "buy" rating. He said he felt the company’s product line, including radio frequency identification chip recognition and server-based games "should help it gain a bigger market share of casino floors."
About the same time of the Ford rating report, Todd Eilers of Roth Capital Partners cut his price target on the company by $2.50 to $5, noting PGIC’s approximately 50% stock price decline since pre-announcing fourth quarter results and providing 2007 guidance in February.
Loser line up
They may have lost the initial battle but some casino applicants in Pennsylvania will get a chance to air their complaints to the state Supreme Court on May 15.
Among the losers who are expected to participate in the hearings in which the spurned bidders will speak their piece are Robert Earl, the founder the of Planet Hollywood restaurant chain, who lost out to the Mashantucket Pequot Tribal Nation; Pocono Manor owner Greg Matzel, whose bid was topped by Pennsylvania businessman Louis DeNaples, and both Forest City and Isle of Capri Casino Inc., who were pushed aside in favor of Detroit developer Don Barden.
James Packer, head of Australia’s Publishing & Broadcasting Ltd., was rumored to be looking around for a possible entry into U.S. gaming by making a pitch for a Las Vegas Strip property.
He wasn’t expected to enter the market through Canada.
But, that’s exactly what he plans to do. He and his partner Macquarie Bank have offered to buy Canada’s Gateway Casinos for $1.18 billion. The deal involves Gateway’s seven casinos in British Columbia and two in Edmonton, Alberta.
Packer, son of the late world-known gambler, Kerry Packer, already operates the Crown Casino in Australia and is a partner with Lawrence Ho in publicly-traded Melco International Developments Ltd., (MPEL) involved in casino development in Macau.
Shareholders of Harrah’s Entertainment Inc. (HET) met last week at Caesars Palace in Las Vegas to approve the sale of the company to two private equity groups for $90 per share of $17.1 billion.
Some 66% of the shareholders voted in favor of the buyout.
Gaming Atty. Frank Schreck, who represents Harrah’s in the deal, said he expects to bring the matter before Nevada regulators sometime this fall. The buyout must be approved in all the jurisdictions in which Harrah’s operates.
Just last week, the European Union (EU) announced that it had approved the deal.
Table game vote
Voters in four West Virginia counties will be asked on June 9 whether they approve installing table games such as blackjack and poker in the state’s racetracks.
Affected are the counties of Jefferson, Hancock, Ohio and Kanawha where racetracks currently operate slot machines.
All were petitioned by Charles Town Races & Slots, whose parent is Penn National Gaming Inc. (PENN); Mountaineer Racetrack & Gaming Resort, owned by MTR Gaming Group Inc. (MNTG); and privately-owned Wheeling Island Racetrack & Gaming Center and Tri-State Racetrack and Gaming Center.
Track operators have indicated that early polls have been favorable to the table game issue.
THE INSIDER: Bear Stearns gaming analyst Joe Greff has boosted his first quarter earnings forecast for Wynn Resorts Ltd. (WYNN) by nine cents to $0.61 per share primarily due to increased market share in Macau.
And, as for Steve Wynn, he reportedly has joined the Excelsior Racing Group in its attempt to win the 20-year racing franchise being made available by the state of New York. He previously was involved with another group that subsequently withdrew from the bidding.
Chicago-based L3 development has agreed to buy the bankrupt Fitzgeralds Casino and Hotel in downtown Reno, Nev., for an undisclosed price.
Scientific Games Corp. (SGMS) has introduced instant lottery games based on Major League Baseball in 12 state lotteries.
Steve Bollenbach has announced his retirement as co-chairman and CEO of Hilton Hotels Inc. (HLT) at the end of 2007 but he already has lined up a job as non-executive chairman of KB Home, the nation’s home-building giant.
Boyd Gaming Corporation (BYD) will release its first quarter earnings on Thursday, April 26, at 9 a.m. PDT.
The government of Macau has released financial information indicating that the 22 casinos in the Chinese enclave generated $7.2 billion in gross gaming revenues for fiscal 2006.
Trump Entertainment Resorts Inc. (TRMP) has named Ravneet Bhandari as senior vice president of revenue management.
A Rhode Island hotel developer, Procaccianti Group, has agreed to pay $155 million for the Newport Grand slots facility. The property will be the cornerstone to a $1.4 billion redevelopment of the tourist city’s north end.