Morgan Joseph Initiates MTR Gaming Group (MNTG) with a Buy

June 12, 2008 8:38 AM EDT

Morgan Joseph initiates coverage on MTR Gaming Group (NASDAQ: MNTG) with a Buy rating and a $7 price target.

The firm said, "In our view, the current price does not fully reflect the company's potential for margin expansion at Mountaineer Casino, Racetrack & Resort and Presque Isle Downs. We believe the market will begin to warm to the MTR story. The company had difficulty achieving its financial goals during their development stage, due to lofty expectations for Presque Isle and an under-estimation of the competitive threat that entered MTR's core market in June 2007. However, we believe the company is now well-positioned to generate steady EBITDA gains and compete more effectively."

Morgan Joseph said the company's marketing focus on northeastern Ohio and northwestern Pennsylvania combined with the increased promotion of cross-market play between Mountaineer and Presque Isle should help widen EBITDA margins. In addition, the firm expects debt reduction to remain a priority for MTR, because it exited the development stage at the end of FY07 and will likely only need to make minimal capital expenditures over the next few years.

MTR Gaming Group, Inc., through its subsidiaries, owns and operates racetrack, gaming, and hotel properties.

Related Categories

New Coverage

Stocks Mentioned

Related Entities

• Morgan Joseph

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?