Boyd numbers worry analysts

Boyd Gaming Corp. will release its fourth-quarter earnings next Thursday, but Wall Street isn’t waiting for the numbers to offer opinions.

Deutsche Bank gaming analyst Andrew Zarnett downgraded his recommendation on Boyd Gaming’s high yield bonds to a “Hold,” saying that some of the company’s fundamentals have weakened.

Zarnett said the sour economic climate in the Las Vegas locals gambling market, which represents about 45 percent of Boyd’s cash flow, does not appear to be improving. Also, the results from the Water Club expansion at the company’s Borgata resort in Atlantic City have been “disappointing.”

Meanwhile, Macquarie Securities gaming analyst Joel Simkins hosted several investor meetings in Atlantic City recently, and thought the Borgata was still that market’s leading property. He also tossed out the idea that some Atlantic City resorts might not be around much longer.

“We believe the market will continue to face some challenges as the economic shakeout occurs,” Simkins told investors. “In our view, there is a distinct possibility that one to three casinos could be permanently closed in the next few years, particularly when many older locations are barely breaking even and, we believe, cannot be rehabbed to be economically viable.”