Analyst optimistic on Ameristar after 4Q report

Feb 12, 2009 2:44 AM
Staff & Wire Reports |

An analyst remained optimistic on Ameristar Casinos Inc. Wednesday, following the company's better-than-expected fourth-quarter performance.

On Tuesday the Las Vegas-based casino operator reported a loss of $1.77 per share. But excluding one-time items, earnings were 20 cents per share, topping Wall Street's average estimate of 16 cents, according to a Thomson Reuters poll.

Nicholas A. Danna IV of Sterne Agee said in a client note he was pleased with the strong January performance of Ameristar's St. Charles and Kansas City, Mo. properties.

"We are optimistic regarding future performance in Missouri and Colorado and expect well over $2 per share in free cash flow following completion of the Black Hawk hotel," Danna wrote.

The analyst maintained his 2009 earnings estimate of $1.11 per share and reaffirmed Ameristar's "Buy" rating and $16 price target.

However, Jefferies & Co.'s Lawrence Klatzkin trimmed his price target on Ameristar to $12 from $16. The analyst also lowered his 2009 profit forecast, saying he was taking a more conservative stance due to current economic conditions. Klatzkin did reiterate a "Buy" rating on the stock.

The casino industry has struggled as consumers tighten discretionary spending due to economic worries and unemployment concerns.

Shares of Ameristar Casinos shed 22 cents, or 2.2 percent, to $9.86 in afternoon trading. A year ago, the stock traded as high as $22.21, but tumbled in October amid the global market meltdown to bottom at $4.64 in November.