Merrill Ups Park Place Entertainment to 'Buy'
Merrill Lynch upgraded Park Place Entertainment (PPE ) to buy from neutral.
Analyst David Anders says he thinks Atlantic City statistics for November may be better than investors expected for the market in general, and Park Place's specific properties. He thinks the clustering of Park Place's properties on the center of New Jersey's Boardwalk initially aided results in the face of new competition from Borgata, the $1 billion joint casino-and-hotel venture with Boyd Gaming and MGM Mirage, and will continue to do so.
Anders notes Las Vegas citywide fundamentals continue to be strong, with room rates up between 11% and 14% in the fourth quarter. He thinks valuation is compelling, with the stock trading at 6.8 times his 52 cents 2004 earnings per share estimate. He says his $13 target implies a 2004 enterprise-value-to-EBITDA ratio of 7.5.