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Based in Las Vegas, Nevada, MGM Resorts International (MGM) owns and operates hotels and casinos, state-of-the-art meetings and conference spaces, and live and theatrical entertainment experiences. Valued at $12.23 billion by market cap, the company’s resorts portfolio encompasses 31 unique hotel and gaming destinations globally, including some of the most familiar resort brands such as Bellagio, MGM Grand, Mandalay Bay, and The Mirage.
Shares of this global gaming and entertainment company have underperformed the broader market considerably over the past year. MGM has declined 4.4% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 26.2%. In 2024 alone, MGM stock is down 13.6%, while the SPX is up 11.2% on a YTD basis.
Narrowing the focus, MGM has outperformed the VanEck Gaming ETF (BJK). The exchange-traded fund has declined about 8.7% over the past year. However, the ETF’s 6.4% loss on a YTD basis compares to the stock’s double-digit loss over the same time frame.
MGM shares rose more than 1% as China added eight mainland cities that were eligible for “individual travel” to Hong Kong and Macau.
On May 1, MGM reported its Q1 results. MGM China’s adjusted property EBITDAR rose 78% year-over-year to $301 million. The company’s adjusted EPS came in at $0.74, representing an increase of 68.2% year-over-year, and its revenue rose 13.2% over the prior-year quarter to $4.38 billion, a new record in the first quarter driven by the continued ramp-up of operations at MGM China after the lifting on Covid-19 restrictions. MGM’s adjusted EBITDAR stood at $1.23 billion. The stock rose 2.8% in the session following the day the results were released.
For the current fiscal year, ending in December, analysts expect MGM’s EPS to grow 8.6% to $2.90 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 16 analysts covering MGM stock, the consensus rating is a “Strong Buy.” That’s based on 14 “Strong Buy” ratings and two “Holds.”
This configuration is more bullish than three months ago, with 11 suggesting a “Strong Buy.”
Recently, JMP Securities’ analyst Jordan Bender reiterated a “Buy” rating on MGM stock with a price target of $58, implying a potential upside of 48.8% from current levels.
The mean price target of $56.56 represents a 45.1% premium to MGM’s current price levels. The Street-high price target of $66.50 suggests an ambitious upside potential of 70.6%.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
