Melco earnings estimate, PT reduced at Sterne Agee

Sterne Agee has cut its earnings estimate and share price target for Melco Crown Entertainment following Q3 results, but said the casino company has catalysts in the short term that may provide a boost to its stock.
The firm cuts its 2014 earnings estimate to $1.33 from $1.35, for 2015 it sees $1.47 down from $157 and for 2016 it expects $2.06 from $2.18.
The share price target was cut to $39 from $48, Sterne Agee said, noting that it is still a 60 percent gain from current levels.
Despite the cuts, Sterne Agee points out potential future growth drivers, including the opening of the City of Dreams in Manila later this year. “The opening also marks MPEL’s first step to becoming a more broad-based regional player in Asia versus a Macau pure-play. The Philippines’ gaming market growth will likely outpace any sizable gaming market this year,” it said.
The company’s Studio City project is also opening in Macau in the middle of next year and will be directly adjacent to the Lotus immigration check-point to Henqin Island, where billions are being invested in hotels and other entertainment, it said.
The company is also upgrading luxury retail at the City of Dreams in Macau and will open Tower 5 at the property in the first-half of 2017, it said.
Melco Crown International said Q3 adjusted EBITDA and revenue both fell 10 percent due to a decline in rolling chip revenues.
Net revenue was $1.12 billion down from $1.25 billion for the comparable period in 2013 and in line with estimates. Adjusted property EBITDA was $305.7 million compared to $339.0 million in the third quarter of 2013.
Reported net income was $132.2 million, or $0.24 per ADS, compared with $179.4 million, or $0.33 per ADS, in the year ago quarter. Adjusted EPS was $0.28, missing the consensus view by one cent.