MGM Mirage hits 3-year low on analyst downgrade

KeyBanc Capital Markets analyst Dennis I. Forst cut his rating on MGM, which he said is the dominant player in the Las Vegas market, from "Buy."

MGM shares dropped $2.17, or 5.9 percent, to $34.43 in afternoon trading, after hitting an annual low of $34.08 earlier in the session. The stock has lost more than 60 percent from its all-time high of $100.50 in October.

"This stock has been in free fall for most of the past three months as investors came to grips with the recessionary reality," Forst said.

Forst cited high fuel costs, the sluggish economy, a new Wynn Resorts hotel opening in early 2009 and reduced airline capacity into the city among the problems facing Las Vegas gaming operators.

Also, Forst said revenue and visitor growth in Macau are not as strong as many on Wall Street expected.

"While we remain optimistic about MGM's internal long-term growth prospects and ever-expanding external joint venture opportunities, it is clear that investors are less willing to pay for MGM's undefined potential today," Forst said.