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September 20, 2021

Analyst John Grassano said stock is oversold, but cuts near-term estimates

Boyd Gaming shares drop after analyst cuts outlook

(US).- Boyd Gaming Corp. shares dropped this week after an analyst said the stock was oversold, but cut his second-quarter earnings forecast for the Las Vegas-based casino operator.

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oyd shares fell 53 cents, or 5.3 percent, to close at us$ 9.48. The stock has dropped from a high of us$ 45.73 last July to a low of us$ 7.90 earlier this month, its lowest price since 2002.

In a note to investors, Buckingham Research Group analyst John Grassano lowered his second-quarter profit estimate below management’s guidance and the consensus forecast, citing weaker than expected trends in the Las Vegas and midwest gaming markets.

He now expects the company to report profit of 25 cents per share, compared with company guidance for earnings between 28 cents and 33 cents per share, and the average of 27 cents per share from analysts polled by Thomson Financial.

The analyst also reduced his full-year 2008 and 2009 estimates, citing increasing competition in Las Vegas and his expectation of continued weaker consumer spending.

Grassano stressed, however, that Boyd’s long-term prospects remain strong and the company’s near-term financial flexibility is still solid. The analyst maintained an "Accumulate" rating on the stock.

"In sum, while Boyd will face some near-term headwinds, the present stock price more than accounts for this risk, and offers the opportunity to capitalize on the upside related to new projects and improving fundamentals, at a very low valuation," Grassano wrote.

He noted that a newly opened hotel has contributed to a solid outperformance in the Atlantic City market. He also said a hotel expansion in the Midwest, scheduled to open during the fourth quarter, should help Boyd regain market share in that region.

Boyd is scheduled to report second-quarter earnings before the market opens on Friday.

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