UPDATE 1-RESEARCH ALERT-Goldman neutral on US gaming operators
(Adds details, share movement)
Sept 19 (Reuters) - Goldman Sachs said it remained "neutral" on U.S. gaming operators as it expects tighter consumer spending, falling home prices, increased unemployment and tougher credit to keep gaming revenue negative through 2009.
Regional gaming operators continue to face external pressures as states are rolling out more gaming (i.e. more competition) to fill budget shortfalls and increasingly implementing commercial casino smoking bans which tend to drive revenue down, analyst Betsy Gorton said in a note to clients.
The smoking bans tend to drive down revenue about 10 percent to 20 percent in the first year and only 5 out of 19 commercial gaming states have smoking bans so far, Gorton said.
Goldman Sachs began coverage of Ameristar Casinos (ASCA.O) and Isle of Capri Casinos Inc (ISLE.O) with a "sell" rating, saying both the regional gaming operators were vulnerable to macro economic headwinds as well as increased competition and low growth.
But, the brokerage upgraded Penn National Gaming (PENN.O) to "buy," saying it is the only regional operator with the balance sheet strength to take advantage of lower multiples.
Shares of Ameristar Casinos were up 4 percent at $17.23, while those of Isle of Capri Casinos were up 7 percent at $8.05. Penn National Gaming's stock was up 7 percent at $31.29 Friday on Nasdaq. (Reporting by Sriram Iyer in Bangalore; Editing by Amitha Rajan)
