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OCTOBER 20, 2003
Boyd: More Buyout Bait? 
Boyd Gaming (BYD
) got clobbered on Oct. 6. Its shares dived 10%, to 13.57, after Boyd warned that third-quarter earnings would be below estimates. But some pros are not apologizing for owning Boyd. They're buying more stock in this owner or operator of 13 casinos -- including Stardust in Las Vegas and Borgata in Atlantic City. Says Jason Ader, a gambling analyst before forming Hayground Cove Asset Management: "I've been buying, as Boyd sports the lowest price-earnings multiple in its group." With the stock cheap and consolidation on the rise, Ader sees Boyd as takeover bait. MGM Mirage (MGG
), which co-owns Borgata, may go after Boyd, he says. MGM is 51% owned by the acquisitive Kirk Kerkorian. Ader has also heard that casino mogul Steve Wynn is interested: He's building a new casino in Las Vegas close to Stardust. Ader puts Boyd's worth at 22 based on recent deals. Joyce Minor of Lehman Brothers (LEH
), which has done banking for Boyd, still has an "overweight" on Boyd. She thinks the bad news is confined to earnings woes at Stardust, Boyd's weakest, and Boyd's Par-A-Dice Casino in East Peoria, Ill., where gambling taxes rose in July. Minor says Boyd will earn 87 cents a share in 2003 and $1.19 in 2004. Spokesman Rob Stillwell says CEO William Boyd, whose family owns more than 50% of Boyd, is more attuned to buying than selling. On buyout chatter, Stillwell says: "I guess we should say: 'Never say never."' MGM didn't return calls. Steve Wynn was unavailable for comment.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.  By Gene G. Marcial
BW MALL
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