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Analysts Optimistic About Boyd Gaming

8 November 2002

LAS VEGAS --Bond rating agency Moody's Investors Service has upgraded the credit rating outlook for Las Vegas-based Boyd Gaming Corp. from "negative" to "stable" on news of consistent cash flow improvements and debt reduction at the company.

"The stable ratings outlook also anticipates that Boyd will use its free cash flow to maintain its current credit profile, and that continued (cash flow) improvement and lower capital expenditure requirements will further strengthen Boyd's ability to deal with near and long-term challenges," Moody's ratings analysts said.

Cash flow -- defined as earnings before interest, taxes, depreciation and amortization -- is a key indicator of casino performance.

Boyd's challenges include the completion and success of its planned luxury resort project in Atlantic City, the threat of Indian casinos in New York and slower growth rates across the gaming industry, analysts said.

The agency also confirmed ratings for specific Boyd debt issues.

Separately, investment firm Bear, Stearns & Co. has upgraded shares of Boyd from "underperform" to "peer perform" due to the company's relatively attractive share price.

"After having sold off by nearly a third in October, we believe shares of Boyd are increasingly attractive at current levels," analyst Jason Ader said.

Additional value to Boyd shares can be found in the 60 acres of land beneath the Stardust hotel and casino on the Las Vegas Strip, Ader said.

Current share prices also adequately discount for future risks such as the possibility of competition from an Indian tribe near Michigan, deteriorating tourism in downtown Las Vegas, increased local labor expenses and the expansion of gaming on the East Coast, he noted.

CIBC World Markets analyst William Schmitt last week raised his rating on Boyd from "Sector Performer" to "Sector Outperformer."

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