Prudential upgrades gaming industry rating

Prudential Securities upgraded its gaming industry rating from "accumulate" to "strong buy" Friday, citing strong upside potential across the industry.

Prudential gaming analyst Joseph Coccimiglio reiterated strong buy ratings on Harrah's Entertainment, Mandalay Resort Group, Mirage Resorts and Park Place Entertainment. Coccimiglio maintained an accumulate rating on MGM Grand, saying there wasn't as much upside potential to that stock as the others in the group.

As a whole, these five stocks have declined 20 percent since the start of 2000.

Coccimiglio said February to May is traditionally a strong period for the Las Vegas market, primarily because of temperate weather and more conventions. The period also has such large events as the Chinese New Year and the NCAA basketball championship tournament, he said.

There's also a strong possibility several of the large gaming operators, particularly MGM Grand, Mandalay and Park Place, could undertake stock repurchases over the next year, Coccimiglio said.

"I think it's just a better period for the markets," Coccimiglio said. "Hopefully the stock prices will follow. If the large five do well, it'll lift the other stocks.

"They make up so much market cap that if you like those five, you'll like the industry."

Prudential's 12-month targets for the largest five operators are: Harrah's, $33; Mandalay, $25; MGM Grand, $57; Mirage, $18; and Park Place, $17.

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