The Analysis below is summarized from Notable Calls's Article on Seeking Alpha on June 12, 2008:
Deutsche Bank is out with a wonderful (and Actionable) call on Casino stocks noting the sector has been hit hard as of late, with large cap names such as Las Vegas Sands ( LVS ), MGM Mirage ( MGM ), and Wynn Resorts ( WYNN ) down 25% on average since oil prices spiked ~3.5 months ago. A confluence of factors has worked in concert to drive casino stocks lower primarily stemming from an inflection in oil prices (underscoring concerns about the cost of transport to casinos and spend per visit).
The Firm's conclusion is that the market is seemingly over-discounting the risk, especially when looking at recent Vegas data, which is down less than anticipated (YTD gaming revs -2.6%).
The most battered of the three stocks they are examining today, LVS shares are down over 35% since March. DB had previously lowered their LVS Las Vegas 2009 EBITDA estimates, resulting in their consolidated EBITDA estimate down over 5%. With the stock down 35% and consolidated EBITDA estimate revised only 5%, could this mean the Street expects another negative revision of 30% to consolidated EBITDA estimates? If so, to achieve a 30% negative revision in their LVS consolidated EBITDA estimates, implicit Vegas EBITDA would need to be revised downward by nearly 100% for DB's conclusion to be that all of the weakness is attributable to oil-related issues.
For details chart, please visit my blog at http://conquerthewallstreet.blogspot.com/2008/06/its-not-too-...
$50.0 (06/26/08)
