Jefferies Lowers Bloomberry Rating To 'Weak Buy'

In a report published Thursday, Jefferies analysts downgraded the rating on

from Buy to Weak Buy, while reducing the price target from Php13.80 to Php13.25, citing the release of the company's 1Q15 results. Bloomberry reported its gross gaming revenue (GGR) at Php8.1B, 18.5 percent short of the Jefferies estimate. "The result leads us to believe that the ramp-up of operations in SkyTower is progressing slower than expected," the analysts said. Bloomberry reported a net loss of Php533M, substantially below the Jefferies estimate of Php1.1B. GGR climbed 14.6 percent y/y, but was down 9 percent sequentially. "We believe that the significantly lower EBITDA and net loss exhibited in 1Q15 were primarily due to the ramp-up of operations in Solaire, especially with the recent opening of SkyTower… BLOOM can no longer capitalize interest expense with the completion of SkyTower," the analysts wrote. "With the continued ramp-up of operations, 1Q15 results may not be reflective of fullyear results. Nevertheless, we are taking a more conservative stance in terms of our GGR growth estimate," the analysts added. The EPS estimates for FY15 and FY16 have been reduced from Php0.40 to Php0.31 and from Php0.59 to Php0.44, respectively.