MGM: Las Vegas And Regional Headwinds Will Likely Cap Near-Term Upside

Analysts have reduced their fair value estimate for MGM Resorts International from $37.00 to $29.00 per share, as softer Las Vegas trends, regional promotional uncertainty, and mixed Macau data temper prior growth and valuation assumptions, despite some capital allocation positives.

Analyst Commentary

Recent Street research indicates that sentiment around MGM Resorts International has turned more cautious, with several firms revisiting their ratings and valuation frameworks in light of softer fundamentals in key markets. While long term structural drivers in digital and international gaming remain intact, analysts are increasingly focused on near term demand trends, promotional intensity, and capital deployment choices.

One notable shift came as coverage was assumed by a new lead, resulting in a downgrade of MGM shares to a more neutral stance and a substantial reduction in the price target. This move reflects growing concern that pressures in Las Vegas and uncertainties across regional markets are eroding the prior upside case, even as Macau continues to perform relatively well. The view is that regional promotional dynamics and competitive behavior are offsetting the benefits of MGM's operational execution in higher growth geographies.

JPMorgan also trimmed its price target on MGM, maintaining a neutral rating as it recalibrated expectations ahead of sector earnings. The firm highlighted that, relative to other gaming names, it sees more compelling near term risk reward opportunities elsewhere, underscoring a perception that MGM's valuation already embeds a fair amount of its recovery story. This stance suggests limited room for multiple expansion until there is clearer evidence of accelerating earnings growth or incremental capital return.

In addition, analysts following Macau have flagged weaker than expected Golden Week performance, with gaming revenue trends pointing to softer visitation and spend than initially hoped. While these comments are sector wide, MGM is grouped with other Macau exposed operators, and the data adds another layer of uncertainty to growth assumptions for its international portfolio. The combination of moderating Las Vegas trends and mixed Macau indicators has led some on the Street to question how quickly MGM can compound earnings from here.

Against this backdrop, MGM's decision to withdraw from the New York downstate casino license process has been interpreted as a strategically disciplined move that enhances capital allocation flexibility. By stepping back from a large, multi year capex commitment, MGM theoretically frees up significant capital that can be redeployed to shareholder returns or higher confidence projects. However, even with this positive, the prevailing tone across more cautious reports emphasizes that execution risks and cyclical pressures may still cap upside in the near term.

Bearish Takeaways

• Bearish analysts have shifted to a more neutral stance on MGM, arguing that valuation now better reflects slower growth and mounting execution risks, particularly in Las Vegas and regional markets.
• Multiple price target cuts, including from major firms like JPMorgan, signal reduced confidence in near term earnings momentum and limited scope for further multiple expansion without clearer demand visibility.
• Softer Las Vegas RevPAR trends and heightened regional promotional activity are seen as key headwinds that could pressure margins and constrain free cash flow, challenging prior bullish assumptions.
• Disappointing sector data from Macau Golden Week has fueled concern that international growth may not fully offset domestic softness, increasing the risk that consensus forecasts remain too optimistic.

What's in the News

• MGM is cited among major listed gaming and sports betting operators as Cboe prepares to launch a federally regulated prediction market platform, highlighting the sector's growing convergence with financial derivatives (Bloomberg via periodical report).
• Shares of Macau exposed operators, including MGM Resorts, have traded weaker as investors weigh the impact of repeated tropical storms on visitation and gaming revenue in the region (Macau Business via periodical report).
• MGM has completed the repurchase of 51,409,623 shares, or about 17% of shares outstanding, for approximately $1.87 billion under its November 8, 2023 buyback authorization, while recording no repurchases in the most recent quarter under that plan (company buyback update).
• A separate buyback program announced on April 30, 2025 recorded no share repurchases during the latest quarter, indicating a pause in incremental buyback activity under that authorization (company buyback update).
• MGM Resorts has been removed from the FTSE All World Index, a change that can influence passive fund ownership levels and trading flows in the stock (index constituent update).

Valuation Changes

• Fair Value Estimate reduced significantly from $37.00 to $29.00 per share, implying a lower embedded growth and earnings trajectory.
• Discount Rate increased slightly from 12.32 percent to 12.50 percent, reflecting a modestly higher perceived risk profile or required return.
• Revenue Growth lowered materially from approximately 0.87 percent to 0.53 percent, signaling more conservative expectations for top line expansion.
• Net Profit Margin raised from roughly 3.84 percent to 5.40 percent, assuming improved profitability despite slower revenue growth.
• Future P/E reduced meaningfully from about 16.8x to 10.5x, indicating a more cautious stance on the multiple investors may be willing to pay for forward earnings.