MGM Resorts International's analyst price target has been reduced to $44.21 from $46.68, as analysts point to slightly weaker revenue growth and profit margin outlooks. This follows cautious industry trends and softer recent regional performance.
Analyst Commentary
Analysts recently provided a mix of positive and cautious perspectives on MGM Resorts International, reflecting a dynamic environment for gaming and hospitality stocks. Their assessments highlight both encouraging signs and notable risks as the company heads into upcoming quarterly results.
Bullish Takeaways- Bullish analysts increased price targets on MGM Resorts, citing strengthening trends in the Macau market and improved EBITDA estimates for the coming years.
- Recent decisions, such as withdrawing from the New York downstate casino license process, are seen as supportive to MGM's capital allocation flexibility. This move frees up significant funds for other strategic uses.
- Some believe MGM shares are already pricing in much of the recent negative news, which suggests limited further downside and an opportunity for upside if performance stabilizes or improves.
- There is optimism around potential industry changes, such as the expansion of iGaming, which could provide additional growth drivers for MGM and peers.
- Bearish analysts are lowering price targets for MGM as a result of declining revenue per available room trends in Las Vegas and softer regional revenue growth.
- Recent analysis suggests that, despite stabilization efforts, underlying trends in key markets like Vegas may be worse than initially expected. This points to continued margin pressure.
- Macau's gaming revenue performance during the key Golden Week period was described as disappointing, with visitation levels falling below projections. This led to sector-wide stock sell-offs.
- Concerns remain about sequential softening in demand through the summer months. These concerns raise questions about near-term earnings execution and the pace of recovery in core markets.
What's in the News
- Macau is preparing for its fourth tropical storm in five weeks, impacting MGM Resorts shares and other casino operators. Notable weakness in trading has been reported (Macau Business).
- MGM Resorts International has been dropped from the FTSE All-World Index (USD).
- MGM Resorts and Playtech have launched "Family Feud," an interactive gameshow streamed live from MGM Grand's casino floor. This expands their "Live from Vegas" portfolio to regulated markets outside of the U.S.
- ARIA Resort & Casino, operated by MGM Resorts, will debut the acclaimed Two Michelin-starred restaurant Gymkhana this fall, enhancing its culinary offerings on the Las Vegas Strip.
Valuation Changes
- Consensus Analyst Price Target has decreased from $46.68 to $44.21, reflecting a reduced valuation outlook.
- Revenue Growth projections have declined modestly, moving from 2.09% to 1.95%.
- Net Profit Margin expectations have dropped notably, shifting from 4.98% to 3.43%.
- Future P/E ratio has increased significantly, rising from 15.8x to 21.8x. This may indicate lower future earnings expectations or higher valuation multiples.
- Discount Rate remains unchanged at 12.32%.
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