Analyst lowers Mandalay estimates, maintains buy rating

Robertson Stephens gaming analyst Harry Curtis slashed earnings estimates for Mandalay Resort Group Friday, but remained optimistic about the long-term prospects for the company.

Curtis lowered fourth quarter earnings estimates from 13 cents per share to 9 cents. Earnings estimates for the next fiscal year were lowered from $1.70 to $1.56.

"In our opinion, the weak demand that the company experienced in the second half of December in Las Vegas (did not improve) meaningfully in January," Curtis wrote.

However, Curtis maintained his "buy" rating on the stock, projecting earnings growth in excess of 25 percent for the next fiscal year. This growth will be driven by the company's casinos in Elgin, Ill., and Detroit, Curtis said.

Curtis also noted that Mandalay plans to use more than $200 million in cash flow to repurchase shares over the next 12 months. This could result in the repurchase of 14 million shares this year, Curtis said, and lower Mandalay's outstanding stock by more than 16 percent by year's end.

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