Ahead of the Bell: Casino operators

Dennis Forst downgraded shares of MGM Mirage to "Hold" from "Buy" and Wynn Resorts Ltd. to "Underweight" from "Hold." He said spending is down in all U.S. gaming markets and will probably keep getting worse. He added that results in Macau have been strong, but somewhat weaker than Wall Street had expected.

Forst lowered his expectations for 2008 and 2009. He kept an "Underweight" rating on Las Vegas Sands Corp., but lowered his price target to $40 per share from $50. He set a price target of $70 per share on Wynn shares, which closed at $83.50 Thursday. Sands stock finished at $50.19.

MGM stock "has been in free fall for most of the past three months as investors came to grips with the recessionary reality," Forst said. He thinks MGM and Wynn both have strong growth prospects, but the stocks will suffer while investors expect U.S. economic weakness to hurt their results.

In addition to consumer spending problems, Las Vegas Sands is also facing stiff competition, he said.

An analyst for JPMorgan downgraded MGM shares to "Neutral" from "Overweight" Thursday and lowered estimates for companies operating casinos on the Las Vegas Strip. Joseph Greff said high gas prices and cuts in airline capacity are eroding hotel occupancy and spending in Las Vegas, which is encouraging the companies to offer discounts.

Calls to MGM Mirage seeking comment were not immediately returned.