The Zacks Analyst Blog Highlights: Penn National Gaming, Caesars Entertainment, Wynn Resorts, MGM Resorts International and GileadSciences

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Sep 30, 2014, 09:30 ET

CHICAGO, Sept. 30, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Penn National Gaming Inc. (Nasdaq:PENN-Free Report), Caesars Entertainment Corp. (Nasdaq:CZR-Free Report), Wynn Resorts Ltd. (Nasdaq:WYNN-Free Report), MGM Resorts International (NYSE:MGM-Free Report) and Gilead Sciences (Nasdaq:GILD-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday's Analyst Blog:

Gambling Stock Roundup

Share prices of most casino operators are going downhill as Macau and Las Vegas continue to disappoint. Gambling revenues in Nevada declined 3.7% for the month of August, while Macau is likely to see the fourth consecutive month of revenue decline in September.

Not surprisingly, the companies operating in the regions are busy coping up and doing their best to overcome the situation. While Penn National Gaming Inc. (Nasdaq:PENN-Free Report) is gearing up for the opening of Plainridge Park Casino next year, Caesars Entertainment Corp. (Nasdaq:CZR-Free Report) is leaving no stone unturned to re-organize its capital structure and get rid of its debt. Meanwhile, Wynn Resorts Ltd. (Nasdaq:WYNN-Free Report) and MGM Resorts International (NYSE:MGM-Free Report) both sued individuals/firms that damaged their reputation (Read last to last week's development: Gambling Stock Round Up for Sep 22, 2014)

Recap of the Week's Important Stories:

1. According to the Nevada Gaming Commission, gaming revenues in Nevada declined 3.7% to $920.2 million for the month of August. This was the first decline following three consecutive months of growth, 0.7%, 14.4% and 8.1% in the months of July, June and May, respectively. We believe the decline was due to the end of the summer tournament season in Las Vegas. (Read: Nevada Revenues Fall in August After 3 Months of Growth)

2. Macau, the only place in China where gambling is legal, is bearing the brunt of UnionPay restrictions, which were imposed as a part of the government's crackdown on corruption. This includes restrictions on VIP gamblers to stop billions of dollars from being siphoned off illegally from mainland China to Macau. This has primarily affected footfall in the casinos. As a result, some gamblers are moving to Philippines and Vietnam to try their fortunes. Per media reports, though mass markets are offsetting the impact to some extent, 2014 could be the worst year for Macau.

The region has posted a decline in gross gaming revenues for the past three months and the trend is expected to continue in September. There is a faint ray of hope with the Chinese week-long national holiday beginning this Wednesday, Oct 1. A few analysts expect the region to record a slight improvement during this phase. However, a few others believe that vacationers traveling at this time would be more interested in family oriented activities and may avoid gambling altogether.

3. Penn National Gaming is working toward the opening of the Plainridge Park Casino scheduled to open in June next year. The company also announced the opening of the Plainridge Park Casino Career Center for the casino to be opened in Plainville, MA. The company is accepting applications for 500 permanent jobs the casino scheduled to be open in June next year. The construction of the casino is more than 50% complete and the company has already employed 400 construction workers and plans to employ 600 more for the same purpose.

The company began the construction of the casino in Mar 2014 after receiving a Gaming License from the Massachusetts Gaming Commission in February. Post construction, the casino would feature a fully integrated 106,000 square foot racing and gaming facility including live harness racing and simulcasting with 1,250 slot machines, a dining restaurant, a sports bar, a food court, a banquet room, 620 structured and surface parking spaces and many other such amenities.

4. Wynn Resorts has reportedly filed a lawsuit in the federal court in San Francisco against hedge fund short-seller Jim Chanos for falsely charging the casino operator of violating a U.S. anti-bribery law. The company indicated that in Apr 2014, Chanos misguided several people stating that the company has violated the federal Foreign Corrupt Practices Act in an "invitation-only" event in Berkeley, CA.

In one other such development, MGM Resorts filed a trademark lawsuit in the U.S. District Court in Las Vegas against Lutz and Gomez, co-owners of M'Life Wellness LLC and M'Life Nevada LLC, for intending to open a marijuana dispensary under the trademark M'Life. The company has claimed that M'Life Wellness and related businesses have chosen a name that is very close to its M life customer loyalty program. The company launched its M life customer loyalty program in 2010 and has spent millions of dollars to promote it.

5. Caesars Entertainment announced in a SEC filing that it has granted the most senior lenders of its largest unit, Caesars Entertainment Operating Company (CEOC), a right to receive first claim to potential payments. Consequently, these lenders will get the first right to possible proceeds from lawsuits brought against the company, including for claims it fraudulently moved assets away from investors. The company was reportedly sued by note holders in August who said billions of dollars of assets were fraudulently transferred out of CEOC to keep the properties out of the reach of creditors.

These senior creditors include holders of bank loans and Caesars' $2.1 billion of 11.25% first-lien notes due 2017, $1.25 billion of 8.5% first-lien securities and $3 billion of 9% first-lien bonds that mature in 2020.

Over the last few weeks, this debt-ridden company is reportedly in serious talks with its creditors to restructure a portion of its $24.2 billion long-term debt. It is working constructively with creditors to deleverage its most indebted unit and is planning a reorganization that would create a sustainable capital structure.

Caesars has not been able to post profits for a very long time, failing to recover from its debt load since the recession. The company also made attempts to get rid of its debts earlier as well.

Gilead's HCV Combo Drug Harvoni Gets CHMP Backing

Good news flowed in at Gilead Sciences (Nasdaq:GILD-Free Report) with the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP) recommending the approval of Gilead's Harvoni for treating adults affected with chronic hepatitis C infection. Harvoni is the proposed brand name in the EU for the once daily fixed-dose combination of ledipasvir (a NS5A inhibitor: 90 mg) and Sovaldi (sofosbuvir: 400 mg).

The CHMP rendered its opinion after an accelerated review procedure. The procedure is adopted for candidates that are expected to be of primary public interest. The CHMP's opinion will now be reviewed by the European Commission (EC) with a final decision expected in the next few months. We expect the EC to approve the cocktail therapy.

The CHMP's favorable opinion was based on encouraging data from three phase III studies (ION-1, ION-2 and ION-3). The studies evaluated the combination with or without ribavirin in almost 2000 genotype 1 chronic hepatitis C patients with compensated liver disease. Apart from data from the above mentioned studies, CHMP also considered data from SOLAR-1 (decompensated cirrhotic and pre- and post-transplant patients), ELECTRON-2 (genotype 3 patients) and phase II studies on genotype 4 HCV patients before rendering the favorable opinion.

Approval of the combination oral therapy would boost Gilead's top line further as the HCV market in Europe offers significant commercial potential with the dreaded infection affecting approximately nine million people there, according to Gilead. Gilead also stated that the majority of the HCV affected population in Europe suffer from the genotype 1 version. The CHMP opinion comes close on the heels of Gilead seeking Japanese approval for the cocktail therapy (read more: Gilead (GILD) Seeks Japanese Approval for HCV Combo Drug).

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