April 7, 2009 / 4:57 PM / 10 years ago

Casinos shares fall on gaming data, MGM downgrade

NEW YORK (Reuters) - Casino stocks fell on Tuesday alongside a broad market sell-off after fresh data showed February gaming revenues in Nevada fell 18 percent from a year earlier as consumers cut back on travel and leisure spending.

State data showed Nevada gaming revenue fell to $831 million in February, down from more than $1 billion a year ago, and MGM Mirage (MGM.N) and Las Vegas Sands (LVS.N) were among the top percentage losers on the New York Stock Exchange.

Adding to selling pressure was Janney Montgomery Scott’s downgrade of MGM to “sell” from “neutral” on fears the casino operator would struggle to sell assets to pay down its debt.

MGM dropped 12.1 percent to $4.86, a day after shares soared on hopes the company could sell resort-style properties in Detroit and Biloxi, Mississippi, to pay its creditors.

“We do not think the increase in share price is justified and continue to believe the company is in a challenging position,” wrote Janney analyst Brian McGill in a note.

MGM’s troubles are an example of the broad challenges facing casino companies amid a sharp drop in consumer spending.

It is also a sign of the recent political backlash against corporate spending in Las Vegas. According to Nevada gaming data, February revenues from casinos along the Las Vegas strip alone fell 23 percent.

That data “has people questioning how sustainable the recent run-up is,” said Robert LaFleur, analyst for Susquehanna Financial Group. “They were bound for a pullback.”

Las Vegas Sands, which is trembling under the weight of its own debt load, shed nearly 17 percent to $4.12, while WMS Industries (WMS.N) fell 11.9 percent to $24.06 and Boyd Gaming (BYD.N) dropped 10.5 percent to $5.03.

Additionally, the Dow Jones U.S. Gambling index .DJUSCA fell 8.1 percent.

Reporting by Deepa Seetharaman; Editing by Brian Moss

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