Allegiant, Boyd Gaming shares get bounce after Tuesday fall

By Steve Green

Wednesday, June 2, 2010 | 8:39 a.m.

The stocks of Las Vegas-based Allegiant Travel Co. and Boyd Gaming Corp. rebounded somewhat today after falling Tuesday amid investor worries about the economy.

Allegiant, owner of airline Allegiant Air, today said it carried 483,016 scheduled and charter passengers in May, up 3.5 percent from May 2009. Its stock traded this morning at $53.46, up from Tuesday's close of $52.83.

On Tuesday the stock fell from Friday's close of $55.29 amid weakness in the travel and hospitality sector caused by analyst downgrades of Las Vegas companies Boyd Gaming Corp. and Pinnacle Entertainment Inc. as well as hotel operator Gaylord Entertainment Co.

Boyd Gaming fell nearly 10 percent Tuesday to $11.89. Dow Jones Newswires and the Associated Press reported Janney Capital Markets analyst Brian McGill cut his rating on the company's stock to sell from neutral, saying he believes the Las Vegas economy will take longer than expected to recover.

"We think there is a sense among investors, which is now reflected in the Boyd stock price, that the locals business is poised to return to the 2004 to 2007 levels at some point," McGill noted, according to Dow Jones. "After looking at various population, employment, type of employment and housing numbers, we have concluded that revenues are likely to stay at a depressed level for quite some time going forward."

"We do not see any reason for gaming spend per capita to meaningfully increase going forward, given the economic backdrop in Las Vegas," he said, according to an Associated Press story.

And competition may increase for Boyd's Atlantic City and Michigan businesses as gambling expands nearby, McGill said in his research note.

Nevertheless, Boyd stock improved today to $12.04.

Pinnacle fell more than 5.5 percent to $11.25 Tuesday after Sidoti analyst Stephen Altebrando lowered his rating to neutral from buy, Dow Jones reported.

According to Dow Jones, Altebrando said the threat of legalized gaming in Texas will act as an overhang on the casino operator's shares as the legislature begins debate on its budget in early 2011. Pinnacle's property in Lake Charles, La., could be hurt by competition from Texas.