Morgan Joseph Reiterates a 'Buy' on Full House Resorts (FLL); Raises Price Target & Estimates

July 29, 2009 11:26 AM EDT
Morgan Joseph reiterates a 'Buy' on Full House Resorts (NYSE Amex: FLL), price target increased to $5.25.

Morgan analyst says, "Our Buy thesis on Full House Resorts has revolved around the potential fee income stream from the FireKeepers Casino, a tribal casino located near Battle Creek, Michigan. Full House owns a 50% interest in Gaming Entertainment of Michigan (GEM), which holds the management contract for FireKeepers. Based on current preparations, we expect the tribal casino to open at the end of the first week of August."

"Full House has extensive gaming industry experience and we do not expect it to sit back and relax now that the FireKeepers opening is near. Indeed, we expect Full House to grow the company through an acquisition (outright purchase or joint venture plus management contract). However, the process has been slow, given the disparate interests of the banks and senior lenders that have suddenly become casino owners, thanks to bankruptcies. We actually believe this works to Full House's advantage: Full House can earn more fee income from FireKeepers and thus generate more free cash flow with which to use toward an acquisition. In addition, we believe it increases its negotiating leverage."

"We have increased our FY09 EPS estimate to $0.21 from $0.19 to reflect an earlier opening date and higher gaming revenue estimates for FireKeepers. Our FY10 EPS estimate goes to $0.39 from $0.37, reflecting the higher w/s/d estimates, offset somewhat by higher SG&A expense at the corporate level."

To see more analyst ratings on FLL Click Here.

Full House Resorts, Inc., together with its subsidiaries, develops, manages, and invests in gaming related opportunities.

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