CIBC World Upgrades Argosy Gaming
Argosy Gaming (AGY ) shares gained after CIBC World upgraded them to strong buy from buy.
Analyst William Schmitt says the upgrade follows the June 22 resolution of gaming tax legislation in Indiana. He thinks the resolution of this issue removes uncertainty and mitigates much of the risk to the story. He notes the legislation allows casino operators to either pay a flat 22.5% tax rate and continue to cruise, or pay a higher graduated tax rate and remain dockside. He expects AGY to continue to cruise, as it appears the tax impact will be less than if it remained dockside.
To reflect the higher tax rate on gaming revenues, he trimmed his EPS estimates from $2.99 to $2.93 for 2002, and from $2.93 to $2.75 in 2003. He also cut his $39 price target to $38.