MGM Mirage resolution fuels gaming stock rally

Gaming stocks rose by double digits for the second straight month during May, fueled partly by MGM Mirage's resolution of the financial issues plaguing its $8.5 billion CityCenter development and some of its corporate financial concerns.

The 10 casino operators and slot machine manufacturers charted by Las Vegas-based business advisory firm Applied Analysis all had double-digit jumps in their average daily stock prices over their April totals. The companies also had double-digit increases in April when compared with March.

"It's positive news when you compare things to three months ago when several gaming companies were trading at price points that indicated they would not survive under their current form," Applied Analysis principal Brian Gordon said. "The stock market is usually forward-looking and reflects expectations, so that's a positive sign."

Still, despite two straight months of double-digit increases, the prices of some of the larger casinos operators, such as MGM Mirage and Las Vegas Sands Corp., are down more than 80 percent in value from where they were in May 2008.

MGM Mirage, which raised $2.6 billion through a stock offering and long-term debt exchange, righted its corporate ship and shored up the company balance sheet a week after finalizing a comprehensive financing package to fund and complete CityCenter, which is expected to open in December.

The average daily share price for MGM Mirage was up more than 68 percent in May.

"MGM Mirage is a very high-profile and significant stock so it kind of had a ripple effect across the sector," Gordon said.

The average daily share price of Las Vegas Sands jumped more than 79 percent in May while shares of Boyd Gaming Corp. climbed 65.6 percent on average during the month. Boyd Gaming's stock price averaged about $10 a share for the first time since September.

Las Vegas Sands opened a $743 million casino in Bethlehem, Pa., on Memorial Day weekend.

The positive month for gaming stocks helped boost the Applied Analysis Gaming Index 20.5 points to 240.04, the second straight monthly increase. April's 30-point jump marked the first month the gaming index rose since December.

The stock prices of slot-machine makers also had a positive month in May. Reno-based International Game Technology's average daily stock price climbed almost 35 percent.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.