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Analyst Raises MGM Mirage, Harrah's Estimates

13 March 2002

LAS VEGAS -- Robertson Stephens gaming analyst Harry Curtis hiked his earnings estimates for Las Vegas-based casino operators MGM Mirage and Harrah's Entertainment Inc. Tuesday, citing a stronger-than-expected recovery in the Las Vegas market.

"We continue to view 2002 as a recovery year in Las Vegas," Curtis wrote in a research note. "However, based on drive-in traffic counts from California, passenger counts at McCarran Airport, and our proprietary room rate survey, demand trends continue to recover ahead of expectations."

With its heavy Las Vegas holdings, MGM Mirage should be a prime beneficiary, Curtis believes, and he told investors he expects MGM Mirage to report better-than-expected results for the quarter ending March 31.

He raised his first-quarter earnings estimate from 33 cents to 37 cents per share, his 2002 earnings estimate from $1.40 to $1.55 a share, and his 2002 cash flow estimate from $1.09 billion to $1.13 billion. Curtis also raised his stock price target from $40 to $42 per share.

MGM Mirage 's room rates could return to last year's levels by the second quarter, Curtis said, and high-end play appears to be ahead of expectations.

Harrah's should also see better results at the Rio from this recovery, Curtis said. He estimated the property would post $73 million in cash flow in 2002 -- a 25 percent increase over 2001 -- driven partly by more efficient operations.

Strength in the Midwest, particularly in Joliet, Ill., should also help earnings, he said.

Curtis raised his first-quarter earnings estimate from 49 cents to 53 cents per share, his 2002 estimate from $2.25 to $2.42 per share, and his 2002 cash flow estimate by $15 million to $1.06 billion. He also bumped his price target from $47 to $49.

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