Pinnacle dips as 1Q results fail to stop economic worries

NEW YORK—Pinnacle Entertainment Inc.'s stock slid Wednesday as its first-quarter results failed to quash analysts' concerns about challenging economic conditions.

Earlier in the day, the Las Vegas-based casino operator reported its quarterly profit climbed to 8 cents per share from 5 cents per share, but the results included a hefty $21.2 million, or 35 cents per share, gain related to Hurricane Katrina insurance proceeds.

Revenue climbed 11 percent to $257.2 million, but missed the $258.7 million average estimate of analysts surveyed by Thomson Financial.

Aside from the quarterly results, Felicia Hendrix of Lehman Brothers said one potential area of concern is the company's development pipeline, which faces uncertainty due to the recent difficulties businesses have had securing financing for their projects.

The analyst kept an "Equal Weight" rating and $26 price target.

Similarly, Oppenheimer & Co.'s David Katz said Pinnacle's mixed property level results were due to economic issues and the ramp up of its Lumiere Place-St. Louis casino.

"Although the portfolio of properties bears incrementally fewer headwinds from competition and regulatory changes, the potential impact of the economy is real," he wrote in a client note.

Katz reaffirmed a "Perform" rating and $16 price target.

The gaming sector, along with many other industries, has been squeezed as consumers clamp down on spending due to the ongoing housing downturn, escalating food and fuel costs, eroding credit and recession fears.

Shares of Pinnacle Entertainment dropped $1.14, or 7 percent, to $15.07. The stock has traded in a 52-week range of $12.12 to $31.34.