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Howard Stutz
 

Stocks take hit

14 July 2008

NEW YORK -- Wall Street did not react well to Thursday's news that Nevada's gaming win dropped by the largest percentage amount in 24 years.

The 15.2 percent statewide slump in gaming revenues in May pummeled stock prices of the largest casino operators.

Gaming analysts expected casino revenues to drop, but not by double digits.

"Right now, the feeling out in the investment community is that things could get a lot worse," said Macquarie Group gaming analyst Joel Simkins.

JPMorgan gaming analyst Joe Greff said Strip revenues were hurt by a reporting method where slot machine revenues from May 30 and May 31 will be reported in June because the month ended on a weekend.

"We note that even after adjusting for this issue, results on the Strip were still pretty ugly," Greff said.

Publicly traded gaming companies were hit with a second piece of bad news Thursday: Gaming revenues at Atlantic City casinos fell 11 percent in June.

Shares of MGM Mirage fell nearly 22 percent, or $6.44 on the New York Stock Exchange, to close at $23.14, the casino operator's lowest price per share since 2005. Las Vegas Sands Corp. dropped almost 11 percent, or $4.09, to close at $34.01, its lowest price in three years. Wynn Las Vegas fell 10 percent, or $7.62 on the Nasdaq National Market, to close at $69.94, its lowest price since 2006. Shares of Boyd Gaming Corp. fell 66 cents to close at $9.28.

Last fall, the share price of MGM Mirage hit $100, Las Vegas Sands was trading at $150 a share, shares of Wynn were as high as $176 and Boyd Gaming was trading for $55 a share.

Nick Danna, an analyst with Stern Agee & Leach, told Marketwatch.com there is no immediate end in sight for publicly traded gaming operations.

"We are recommending that investors avoid the Las Vegas-centric stocks as it appears that market is performing worse than some of the regional ones," Danna said. "People are just staying closer to home."