Isle of Capri Casinos edge up following sharp drop

Shares of Isle of Capri Casinos Inc. rebounded slightly Thursday following Wednesday's sharp decline, after the company reported a wider quarterly loss.

For its fiscal fourth quarter, the regional casino operator said its loss widened, due in part to an impairment charge related to its U.K. business, but adjusted results beat expectations.

Isle of Capri also cited flooding in Mississippi, a smoking ban in Colorado and rising gas prices for its weaker results.

Jefferies & Co. analyst Lawrence Klatzkin reiterated his "Buy" rating in a note, and said he believes the company's new management team can "make lightening strike twice" by turning around Isle of Capri following a similar project.

The St. Louis-based company is rebranding its properties, the analyst noted, and has several sites in Florida and Mississippi it can develop.

Klatzkin raised his profit estimates for the year, primarily due to lower interest expense, but slashed his price target to $12.50 from $22, reflecting a lower multiple and reduced estimates for earnings before interest, taxes, depreciation and amortization.

KeyBanc Capital Markets analyst Dennis Forst was more lukewarm in a note. "Although we are comfortable with the new management team and its strategic plan, we remain cautious toward the Midwest gaming markets as consumer spending, confidence and discretionary income are all in short supply," Forst wrote. "Consequently, until the data points are clarified and 'stars more aligned,' and improving, we are maintaining our 'Hold' rating on ISLE shares."

In midday trading, Isle of Capri shares rose 6 cents to $4.26 after shedding 5.6 percent the prior day. Shares earlier traded as low as $3.97, their lowest point since February 1999.