After a colossal drop that began for most companies in October, prices fell to their lowest levels in a year on July 11, the day the Dow Jones industrial average dipped below the 11,000 mark for the first time in nearly two years.

The market capitalizations of Las Vegas' largest publicly traded gaming companies are one-half to one-sixth the level they were less than a year ago, leading some analysts to think the companies are now undervalued.

Most analysts are hoping better than expected second-quarter earnings reports will affirm the confidence they have in the industry and the vote of confidence most analysts have given gamers in maintaining positive ratings of the stock issues.

"The underlying value hasn't changed for the big guys," said Deutsche Bank gaming analyst Bill Lerner, the only professional Wall Street watcher based in Las Vegas.

Lerner said that when stocks for Wynn Resorts, Las Vegas Sands and MGM Mirage were at their peak in October, the companies were well-positioned to raise money at reasonable rates and the development pipelines were reasonably secured.

But in the fourth quarter the bottom fell out.

"The world has changed pre-Venetian Macau and pre-Palazzo, and people began raising questions about these companies' ability to fund the development pipeline," Lerner said.

The slide for gaming stocks has been dramatic.

On Oct. 10 MGM Mirage's stock price was at a 52-week high of $100.50. On July 11 it had fallen to $21.91 and earlier this week it was trading at $23.68.

Las Vegas Sands, which operates the Venetian and Palazzo on the Las Vegas Strip, and Wynn recorded their best days on Oct. 29 - $176.14 for Wynn and $148.76 for Las Vegas Sands. On July 10 Wynn had retreated to $69.27 while Las Vegas Sands fell to $31.32. On July 14 Wynn climbed back to $77.29 while Sands bounced back to $33.55.

Boyd Gaming, meanwhile, which is in the midst of building its ambitious Echelon resort on Strip land formerly occupied by the Stardust, saw its stock price start to deteriorate after a 52-week high of $54.22 on July 16, 2007. It fell to $8.08 on July 11, but had bounced back a bit to $8.91 by July 14.

Lerner said a confluence of well-documented financial events resulted in the collapse of gaming industry stocks: the drying up of the financial markets spurred by the downturn in the housing market and the higher cost of energy, which has deepened the economic malaise and reduced discretionary spending.

That, of course, cut into casino revenue.

"But when you look at the data, things simply aren't as bad as the stocks are reflecting," Lerner said.

He isn't alone in that assessment.

Larry Klatzkin of New York-based Jefferies & Co. kept his "buy" rating on MGM Mirage and said May's sizable Las Vegas Strip revenue decline "is deceptive as customers are making a flight to quality and MGM is gaining market share."

In a report to investors, Klatzkin said MGM Mirage management is expecting CityCenter to produce more than 10 percent return on investment at a minimum and the company is working to retire debt on the project as quickly as possible so it produces positive free cash flow soon after its opening.

Dubai World, which has invested in CityCenter, is more positive than ever about MGM Mirage, he said.

"We believe that MGM is significantly undervalued at this time," Klatzkin said. "We reiterate our 'buy' rating, especially as the value of future projects starts being realized over the next few years."

Robin Farley, a gaming analyst with New York-based UBS Securities, reduced her earnings forecast for Wynn, Las Vegas Sands and MGM Mirage in a note to investors, but said those companies' strength is in their business in Macau, which continues to provide robust revenue.

Lerner's Deutsche Bank colleague, Andrew Zarnett, also reiterated a "buy" rating for Wynn.

"We believe Wynn, which caters to the affluent customer with greater disposable consumer spending, should be somewhat insulated in the event of a further downturn in the economy," he wrote. "However, we do caution that they are not entirely immune to a deceleration in the economy and a reduction in consumer spending."

Preliminary second-quarter results and company guidance were announced by Wynn on July 10. In addition, Wynn Chairman Steve Wynn announced plans to buy back as much as $500 million in stock, which helped the issue rebound by more than $8 the next day, the biggest gain since March 2006.

Second-quarter profit excluding some items climbed to $232 million to $242 million, Wynn said.

Earnings before interest, taxes, depreciation and amortization and other items, or adjusted cash flow, fell to $80 million to $84 million in Las Vegas from $115.3 million a year earlier, as gamblers won more than normal, Wynn said.

In Macau, Wynn said adjusted cash flow rose to $152 million to $158 million, from $92.7 million.

"You have the kicker of pretty solid performance in Las Vegas, where other competitors are struggling, and incredible outperformance in Macau, married with buying back another $500 million of stock," said Joel Simkins, an analyst with Macquarie Securities Inc. in New York.

As struggling U.S. consumers curb trips to Las Vegas, gambling is booming in Macau, which in 2006 overtook the Strip as the world's biggest gambling hub.

The number of casinos has more than doubled to 29 since the government ended the 40-year monopoly held by billionaire Stanley Ho. Macau is the only Chinese region where casinos are legal, and in 2002 awarded gaming licenses to new operators, including Wynn.

Macau earnings were boosted by a 75 percent surge in gambling by VIPs, defined as those who spend at least 1 million patacas ($124,000) each visit, Wynn said.

These wealthy gamblers, who are ferried to casinos by junket operators, accounted for 67 percent of Macau's total gaming revenue last year, up from 63 percent in 2006, according to the city government.

"It really points to the company carving out the niche at the very top end of the market in Macau," Simkins said. "They're really going after the highest of high rollers in the corner of that market."

Wynn Resorts opened Wynn Macau in September 2006 and is also developing Encore Macau next door, scheduled to open in 2010.

Wynn is currently designing his planned third Macau casino for a site on Cotai.