We would acknowledge that in a consumer-led recession casinos’ top lines will come under pressure, but we do not think consumers will stop completely...," the brokerage firm wrote in a note to clients.
Some of the more notable companies targeted include MGM Mirage (MGM), which was cut to us$ 17 per share from us$ 32, and Las Vegas Sands (LVS), which was cut to us$ 25 per share from us$ 60. Wynn Resorts (WYNN), Penn National Gaming (PENN), Pinnacle Entertainment (PNK) and Boyd Gaming (BYD) also saw price target cuts.
As a result of Goldman Sachs’ slash-and-burn run through the sector, the SIG Gaming Index (SGV) has plunged more than 5.5% so far today, pushing the index to a fresh annual low. But casino stocks were in trouble prior to this morning’s brokerage action, as SGV is off more than 73% since January 2008, steadily declining under the weight of its 10-day and 20-day moving averages.
Compared to the rest of the market, the SGV’s week’s relative-strength index versus the S&P 500 Index (SPX) has been in decline mode since November 2007.