J.P. Morgan Upgrades Rating, Raises PT To $8.50 On BYD

J.P. Morgan has upgraded its rating from Underweight to Neutral and raised the price target form $7 to $8.50 on Boyd Gaming Corp. BYD based upon the stocks current valuation. According to J.P. Morgan, “Our ratings change is driven by BYD's YTD share price performance (down 18%) relative to its peers' YTD performance (+13% for the average of ASCA, PENN, PNK) and a valuation that, in our view, more realistically reflects BYD's challenges in dealing with a soft LV locals market (increased competition, tough employment environment) and increasing competitive pressures in Atlantic City. While we (still) believe that 2011 Street estimates are aggressive (though less so than in the past year given estimate reductions over the last few quarters), we believe that investors' expectations for quality EBITDA and EPS generation from BYD in the near term are quite low (especially given where recent investor sentiment is toward consumer discretionary sectors like gaming). With this call this morning, which is essentially a valuation call, we advise investors to gradually move out of underweight positions, but there is no need to rush out the door to do so given a lack of near-term positive catalysts. Our operating estimates are unchanged.” BYD closed on Friday at $8.71.