Major casino operators posted lower first-quarter profits as the recession sapped demand for gambling and travel, but their shares soared amid indications that the companies will avoid bankruptcy.
From MGM Mirage (MGM.N) to Las Vegas Sands (LVS.N), gaming companies either saw earnings plummet or slide into the red, but executives cautiously forecast that a year-long travel and gambling slump may have bottomed.
Some analysts warned, however, that the market remained weak, and executives stopped short of predicting a full-fledged recovery.
MGM Mirage and Las Vegas Sands have come close to violating loan covenants dictating the level at which earnings as a ratio of debt must be maintained.
Wynn Resorts Ltd's (WYNN.O) balance sheet has been less of a question mark, but there is no doubt that it too has suffered as leisure and business travelers cut back on spending.
Still, shares of Wynn, which reported on Tuesday an adjusted quarterly loss of 27 cents a share, have gained 28 percent so far this week, while shares of MGM, which posted a 10-cent-per-share loss on Monday, are up 63 percent.
"MGM is trading on new confidence that the company is solvent," said Sanford Bernstein analyst Janet Brashear.
Chief Executive Jim Murren said the casino operator sees signs that business levels are stabilizing as it heads toward the completion and phased opening later this year of its $8.5 billion CityCenter joint venture on the Las Vegas Strip
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