Morgan Joseph Downgrades MTR Gaming Group (MNTG) to Hold

March 13, 2009 8:58 AM EDT

Morgan Joseph downgrades MTR Gaming Group, Inc. (Nasdaq: MNTG) from Buy to Hold.

Morgan analyst says, "Mountaineer, MTR's flagship property in West Virginia, continues to face stiff competition that should only get stronger as FY09 progresses...We estimate that MTR will come close to breaching bank covenants this year. The total debt leverage ratio steps down to 5.00x for 3/31-6/30/09 and then to 4.75x for 9/30-12/31/09. We believe the company has flexibility in its capex budget to adjust the timing of slot purchases to remain compliant. This is a double-edged sword, though, because postponing the purchase of the freshest slot machines could be detrimental to slot win at Mountaineer Park, where the slot floor, for the most part, is well past its prime. A stale floor will make competing with the expanded Meadows and new Rivers Casino even more difficult...Lowering FY09 Estimates. Our FY09 revenue, EBITDA, and EPS estimates go to $457mm, $72.0mm, and $0.10 from $465mm, $73.3mm, and $0.13. The impact we expect the competition to have on Mountaineer Park's results should more than offset the good momentum at Presque Isle and cost-cutting efforts undertaken by the
company."

MTR Gaming Group, Inc., through subsidiaries, owns and operates Mountaineer Casino, Racetrack & Resort in Chester, West Virginia; Presque Isle Downs & Casino in Erie, Pennsylvania, and Scioto Downs in Columbus, Ohio.

Related Categories

Downgrades

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?