Deutsche Bank launches gaming sector coverage

August 13, 2002 12:01 PM
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In one of his first official actions since joining the firm, Deutsche Bank Securities analyst Marc Falcone recently launched coverage of the firm’s Gaming and Lodging sector with the initiation of 10 major companies.

The companies include Las Vegas based Harrah’s Entertainment, Mandalay Resort Group, MGM Mirage, Park Place Entertainment, Station Casinos, FelCor Lodging Trust Incorporated, Hilton Hotels Corporation, Host Marriott Corporation, Marriott International Inc. and Starwood Hotels & Resorts Worldwide.

In identifying the companies, Falcone said gaming fundamentals are strong at the same time that stock valuations are near the group’s post-9/11 lows.

"Gaming stocks should outperform other cyclicals led by the Las Vegas names," Falcone said. He added that aspects such as earnings transparency, the recession-resistant nature of the group, solid regional performance, a rebound in Las Vegas, a focus on total profitability and low supply growth currently provide a favorable backdrop for the companies.

Moreover, Falcone said hotel stock valuations are compelling, but there was a more positive outlook emerging over time. He points out that while the lodging companies are focusing on reducing costs and supply growth is low, a rebound in business travel is the missing catalyst for the stocks.

"Although the group could mark time in the near-term, given the extended downturn in business travel, the recent spurt of weak economic data and lowered expectations for (the third quarter), we believe value oriented investors with a long-term investment horizon should benefit from exposure to the sector," Falcone said.

Falcone joined Deutsche Bank earlier this year after serving as the New York-based managing director of Bear Stearns gaming and leisure equity research team under Jason Ader.

With roughly $900 billion (Eurodollar) assets and approximately 84,500 employees, Deutsche Bank offers its 12 million clients financial services in 75 countries throughout the world.

The Bank has committed to be a leading global provider of integrated financial solutions for demanding clients and the pre-eminent bank in Germany generating exceptional value for its shareholders and people.

Within the past year, Deutsche Bank and its affiliates has managed or co-managed public offerings (for which it received fees) for MGM Mirage; Felcor Lodging Trust Incorporated; Harrah’s Entertainment; Hilton Hotels Corporation; Host Marriott Corp.; and Marriott International Inc.