MGM Mirage Among Casino Stocks Leading Market Surge
A ray of sunshine hit the casino industry today as good news in the credit department helped casino stocks follow the market trend upward. The stock exchange saw a general movement to higher share prices after the Federal Reserve lowered the benchmark interest rate by a half percent.
More specifically, MGM Mirage's worrisome CityCenter project acquired some of the financing needed to finish constuction, and the company cut costs in several areas, leading to a boost in investor confidence.
MGM Mirage stock opened ahead of yesterday's close and never looked back, finishing up 33 percent at $13.75 a share. Other casino stocks followed suit, as Las Vegas Sands closed up 80 percent at $8.91, after disclosing ongoing talks with the Singapore government concerning new casinos.
Wynn Resorts, which had suffered less from investors' liquidity worries than other casino issues, rose 26 percent to $41.48 a share.
MGM Mirage announced it had received $500 million in commitments toward the $3 billion needed to complete CityCenter. The company also pared $400 million off the complex's budget, and predicted lower capital expenditures in 2009 than analysts had anticipated.
Stifel Nicolaus and Company's gaming sector analyst, Steven Wieczynski, wrote, "Any gaming operator that postpones spending and preserves capital in this environment should be rewarded, in our view."
Jack Ellroy, economic advisor to Online Casino Advisory, indicated that, if credit markets begin to loosen following the Fed action, casino stocks may be seen as bargain hunter specials.
