BTIG Initiates MGM Resorts Coverage with Buy Rating and $52 Price Target
BTIG analysts started coverage on MGM Resorts (NYSE:MGM) with a Buy rating and a $52 price target on the stock.
The analysts highlighted the attractive fundamental story, favorable risk/reward ratio, and mixed investor sentiment as key factors for the initiation. They see potential for upward revisions in estimates driven by positive performance in Las Vegas and China, along with healthy capital returns, possibly bolstered by dividends from China and regional property sales.
The analysts noted that the current valuation of MGM's Vegas operations, at approximately 8 times 2024 EBITDA, does not fully reflect the company's strong fundamentals. They expect this multiple to expand as concerns about Vegas diminish and financial performance improves. Additionally, the analysts believe the market is underestimating the growth potential of MGM’s international digital operations, which could see 2-4 times higher revenue and EBITDA performance compared to current consensus in the coming years.
The analysts also pointed to MGM's expanding diversification, with opportunities in Japan and other projects like New York potentially materializing over the next two years, which could further enhance growth.
Overall, the analysts see multiple avenues for shareholder gains in both the near and long term as MGM continues to grow and diversify its operations.
| Symbol | Price | %chg |
|---|---|---|
| 035250.KS | 14190 | 0 |
| 034230.KQ | 14860 | 0 |
| 034230.KS | 12570 | -1.67 |
| 114090.KS | 12050 | -0.66 |
MGM Resorts Earns an Upgrade Following Q1 Beat
Susquehanna analysts upgraded MGM Resorts (NYSE:MGM) to Positive from Neutral, increasing their price target on the stock to $54 from $46. Although MGM's Q1/24 results reported yesterday were only a slight improvement over expectations, the management call highlighted a stronger focus on future growth.
Management expressed plans to invest more capital in their most profitable asset, Las Vegas, which represents about 80% of the company's value. They also mentioned strategies to optimize revenue in the softer Q2/24 environment before accelerating growth through investments and other tools. The sports calendar's seasonality and favorable comparisons in the second half of 2024, partly due to the impact of last year's cyberattack, also offer growth potential.
The analysts expect these factors to lead to significant upward revisions in estimates for 2024 and 2025. They believe that understanding the prospects for MGM hinges on recognizing the Las Vegas market's importance, and sees sufficient valuation support considering the key value drivers in Las Vegas.
