NEW YORK -- Regional casino operators may have better-than-expected first-quarter earnings on continued cost control efforts, a Goldman Sachs analyst said Monday as she raised price targets on some of the stocks.
Although the casino industry has been squeezed as consumers pull back on their discretionary spending, Betsy Gorton anticipates that better-than-expected February revenue results could boost some first-quarter profits.
While the recession still looms, Gorton expects regional casino companies like Ameristar Casinos Inc., Penn National Gaming Inc. and Pinnacle Entertainment Inc. to pick up market share from the struggling Harrah's Entertainment as well as capitalize on cost-conscious gamblers and government actions.
"We are cognizant that economic conditions remain volatile and unemployment is still projected to go higher, but we think the regional markets will continue to benefit from staycations, the upcoming stimulus and easy comparisons," she wrote in a client note.
Gorton boosted her price target on Ameristar to $11.50 from $10.50. The Las Vegas-based company's stock fell 25 cents, or 2 percent, to $12.31 as the broader market slid.
The analyst also raised her price target on Penn to $28 from $25 and boosted Pinnacle's price target to $8 from $7.75. Penn's stock shed 61 cents or 2.5 percent, to $23.59, while shares of Pinnacle Entertainment dropped 10 cents, or 1.41 percent, to $6.99.
Gorton favors Penn out of the regional casino operators she covers, citing the Wyomissing, Pa.-based company's solid balance sheet and its ability to potentially buy assets at lower prices.
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