) to underweight from neutral.
Analyst Harry Curtis says the downgrade reflects the casino operator's second-quarter shortfall, and a longer-than-expected ramp-up of EBIDTA for Borgata, the new casino and hotel in Atlantic City. He also cites incremental capital spending in markets that could become intensely competitive within 18 months.
Curtis notes the stock was an outperformer in anticipation of Borgata's opening, where high operating expenses will depress results for the next six months. He notes most of the company's other casinos are producing EBITDA slightly behind his (and consensus) estimates.
He cut the $1.04 2003 earnings per share estimate to 87 cents, and cut the $1.35 2004 estimate to $1.20. He thinks the downside should be mitigated by a dividend of 30 cents.