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BYD Q4 looks like a beat.  Will the sell side finally give this stock a break?

As always, BYD is pretty low on the list of what’s ‘sexy’ in gaming right now, and maybe that’s why we like it.  In a slow but steady US GDP growth environment, we believe Las Vegas – both the Strip and Locals – could surprise on the upside in 2012. 

For Q4, BYD could beat pretty handily.  We’re projecting $115 million in EBITDA and the Street is only at $111 million.  Even our number may be conservative.  Our EPS estimate is $0.01.  This should be the first YoY increase in EPS since Q3 2007.  We think management will be positive on 2012 during the conference call, particularly about the LV Locals market which finally may start to show consistent, albeit slow, growth going forward.

BYD is definitely not a consensus long call.  Most analysts have Neutrals, Holds, and Sells on the stock.  JPM and Lazard recently downgraded it due to Atlantic City concerns, right before New Jersey released strong December numbers.

Model details:

We estimate that BYD will report $583MM of revenues and $115MM of EBITDA in 4Q11.

  • Las Vegas locals revenue will be down just -0.5% YoY to $151MM and EBITDA will increase to $35MM due to a 2% YoY reduction in operating expenses.
    • 4QTD Locals revenue has been up 6.8% but due to an accounting peculiarity in the Nevada Gaming Commission reporting, December will likely be down.  
  • Downtown revenue of $58MM and EBITDA of $11MM
  • Midwest & South revenue of $197MM and EBITDA of $39MM – which includes $27MM of revenues and $8MM of EBITDA from Imperial Palace
  • Borgata revenue of $174MM and EBITDA of $40MM

Other assumptions:

  • $10MM of corporate expense
  • $35MM of D&A
  • $2MM of share based comp
  • $1MM of deferred rent
  • $40MM of interest expense