Analyst: Gaming stocks still a risk
One Wall Street analyst is still not convinced that MGM Mirage is out the woods, despite the company’s recent financial maneuverings that saved the $8.5 billion CityCenter development and restructured its corporate financial picture.
Steven Kent of Goldman Sachs told investors a number of risks continue to persist surrounding the stocks of Las Vegas-based casino operators, including MGM Mirage, Las Vegas Sands Corp. and Wynn Resorts.
“Even improving capital markets cannot address over-leverage and a troubled fundamental outlook without significant equity value destruction,” Kent told investors. “Our conclusion is that, while outright bankruptcy risk has been lessened, these stocks still don’t provide much up side and discount to a sharp recovery.”
Kent is advising investors to look elsewhere in the gaming sector, such as regional casino operators like Penn National Gaming and Ameristar Casinos.
But if he had to make a choice, Kent said his pick would be Wynn because of its lower credit risk and its Wynn Macau casino.
MGM Mirage was his least favorite choice because of the company’s debt and concerns that CityCenter may miss the target on investment returns.