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Researchers sour on gaming

Feb 25, 2003 6:43 AM

Zacks.com, a subsidiary of Zacks Investment Rresearch Inc., apparently has turned sour on gaming companies. Last week, the company put both MGM MIRAGE Inc. (MGG) and Harrah’s Entertainment Inc. (HET) on their " strong sell" list.

Addressing MGM MIRAGE, Zacks wrote, "The company easily surpassed the year-ago result and beat Wall Street’s expectations. However, in early January, MGG had lowered its guidance for the quarter. While earnings in the quarter surpassed last year, it was still below expectations due to lower than expected casino volume in December, mainly from weakness in the national high-end business.

"Estimates for this year and net are still more than 20 cents below levels from one month ago”¦Gamblers will undoubtedly continue to frequent MGG, but conditions are currently rather challenging and investors may want to wait for a more cooperative period to make an investment in the company."

On Harrah’s, Zacks wrote, "While fourth quarter results improved upon the year ago performance, it missed Wall Street’s expectations. Over the past month, analysts have reduced the company’s earnings estimates for both this year and net. HET still posted a +7.4% increase in revenues to $1.02 billion, as it achieved record results for the full-year.

"While these developments are surely good news for the company, it is probably the best move to wait for analysts to bump up HET’s earnings estimates before adding or strengthening a position."