Canadian Investment Bank Initiates Churchill Coverage
by Eric Mitchell
Date Posted: 12/12/2000 11:57:42 AM

CIBC World Markets initiated coverage of Churchill Downs Inc. Tuesday and released an analysis of the Thoroughbred racing industry. The report comes out one week after investment bank Bear Stearns released its own state-of-the-industry report and initiated coverage of the Louisville, Ky.-based racetrack conglomerate.

CIBC World Markets analysts Adam Steinberg and William Schmitt said Thoroughbred racing companies are attractive because of racetrack consolidation, increases in alternative gambling, expansion of simulcasting, improved distribution of racing, and potential growth in international markets.

The investment bank initiated coverage because Churchill Downs' stable of six racetracks and branding creates a substantial growth opportunity, particularly with overseas distribution.

"We take a favorable view of diversified operators," states CIBC's report. "In our view, broad-based geographic and portfolio diversity can smooth the earnings stream, as well as insulate the company from poor results at any one track."

Other pari-mutuel companies favored by CIBC World Markets includes Magna Entertainment (Nasdaq: MIEC), MTR Gaming (Nasdaq: MNTG), which owns Mountaineer Racetrack in Chester, W.V., Penn National Gaming (Nasdaq: PENN), and Canterbury Park (Nasdaq: TRAK) in Minnesota.
CIBC World Markets has given "strong buy" ratings to MTR Gaming and Penn National.

"The presence of slots at tracks, as well as ownership in of casinos in the portfolio, are a significant growth driver that can improve valuation," Steinberg and Schmitt said about these companies.

CIBC World Markets is the global investment banking, securities brokerage and asset management arm of the Canadian Imperial Bank of Commerce.

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