he markets have realized that the us$ 700 billion rescue plan won’t work quickly to unfreeze the credit markets, and that many banks are still having difficulty gaining access to cash. That’s caused investors to exit stocks and move money into the relative safety of government debt.
Aside from market news, Goldman Sachs analyst Steven Kent said in a client note that funding MGM Mirage garnered for its CityCenter joint venture project may have come in below expectations.
Earlier in the day, MGM Mirage said it secured a us$ 1.8 billion senior bank credit agreement for CityCenter that matures April 2013. The financing is considered the first stage of the us$ 3 billion financing package for the us$ 9.2 billion Las Vegas casino project. MGM Mirage’s stock fell us$ 3.50, or 16.6 %, to us$ 17.50 in afternoon trading. It hit a nearly five-year low of us$ 17.28 earlier the session.
In addition, Dennis Forst of KeyBanc Capital Markets trimmed some of Penn National Gaming Inc.’s estimates after the casino operator lowered its third-quarter earnings before interest, taxes, depreciation and amortization forecast to us$ 146 million from us$ 178 million. The analyst was also concerned about a potentially worse-than-expected economic slowdown.
Casino operators, and many other businesses, have been pressured as consumers tighten spending due to diminishing credit, the ongoing housing downturn and escalating food and gas costs. Forst reduced his third-quarter earnings estimate to 31 cents per share from 52 cents per share and cut his fourth-quarter forecast to 32 cents per share from 41 cents per share.
The analyst reiterated a "Hold" rating. Penn National Gaming’s shares dropped us$ 1.73, or 8.6 %, to us$ 18.30. It declined to a more than four-year low of $16.89 earlier in the day.
Other stocks hitting fresh lows included Las Vegas Sands Corp., which slipped to an all-time low of us$ 19.10, and Wynn Resorts Ltd., which sagged to a more than two-year low of us$ 62, before making back some losses.