BofA/Merrill Lynch Sees Multi-Year Recovery for Las Vegas Stocks (LVS, MGM, WYNN, BYD)

February 8, 2011 3:00 PM EST
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Bank of America/Merrill Lynch analysts see a boost coming to Las Vegas casino operators coming as consumers start to feel more confident about spending money in the recovering economy.

The firm said that the increased demand for hotel rooms and gambling in Sin City shows that the casino operators can focus more domestically after shifting to Asian markets like Macau during the recession.

"Las Vegas is on the cusp of a multi-year cyclical recovery, driven by favorable supply-demand dynamics," analyst Shaun Kelley said in a research note. "Big picture, we think the setup for the Las Vegas-centric stocks, and MGM in particular, is positive in 2011."

BofA/ Merrill Lynch raised its rating on MGM Resorts International (NYSE: MGM) from Neutral to Buy, while lifting Boyd Gaming Corp. (NYSE: BYD) two notches from Underperform to Buy.

The analysts see revenue per room available in Las Vegas, a key gambling stock metric, increasing 7 percent in 2011. The measurement fell 29 straight months through May 2010.

Other gaming stocks set to benefit from improved Las Vegas traffic include Las Vegas Sands Corp. (NYSE: LVS) and Wynn Resorts Ltd. (NASDAQ: WYNN).

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