Industry Insider by Ray Poirier | Two major gaming companies saw their individual stock prices plummet on Monday following negative reports filed by a pair of gaming analysts.
MGM MIRAGE Inc. (MGM) fell $3.32 to $57.88 after David Katz of Oppenheimer & Co. expressed concern that weaker business would limit the company’s growth prospects.
He added that the closure of the company’s Monte Carlo Hotel/Casino because of a fire, potential business declines on the Las Vegas Strip and signs of weakness on the company’s convention side was weighing down the stock.
Katz downgraded MGM to "market perform" from his previous rating of "outperform" and slashed his price target for the shares to $62 from the previous $85 per share.
However, he said he felt that support from the company’s major shareholders, Kirk Kerkorian’s Tracinda Corporation and recent investor Dubai World would limit stock price declines.
In another gaming analyst clients’ note, Brian McGill of Wachovia Capital Markets also focused on weakness in the Las Vegas casino market and dropped his earnings forecast for MGM Mirage’s first fiscal quarter to $0.39 per share from his previous estimate of $0.46 per share.
Also taking a hit were the shares of International Game Technology (IGT) following a gaming analyst report that saw a slowdown on anticipated replacement gaming machine sales.
Joe Greff of Bear Stearns saw the current economic slowdown as developing a likely decline in IGT’s call for replacement sales both for the remainder of this year and into 2009.
He also said he believes the company will see lower results from its installed base on decreased spending at slot machines in most gaming markets.
Despite lowering his profit forecast for IGT from $1.62 to $1.50 per share for 2008, Greff maintained his rating of "outperform."
The IGT shares fell $2.02 during Monday’s trading to close at $39.51 each