MGM May Soon Open The Biggest Regional Casino In The U.S.
Stifel analysts recently had an opportunity to visit MGM Resorts International's (NYSE: MGM) National Harbor development site in Oxon Hill, Maryland. Stifel released a report on the prospects for the new resort after touring the grounds.
Analysts praised the location of National Harbor, which is within 10 miles of downtown Washington D.C. The new resort will be the closest major gaming property to Washington when it opens and should be a major draw for the wealthy D.C. and northern Virginia crowd, including international visitors.
In addition to the prime customer base, analysts see no major competition in the region. The only drawback to the location mentioned in the report is Maryland's relatively high gaming tax.
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Analysts believe that once National Harbor gets up and running, it could be the biggest regional gaming resort in the country. MGM certainly has high hopes for the property, as it is shelling out about $1.2 billion for its construction.
Analysts forecast that the property will be well worth the investment by MGM. They see potential for up to $250 million in EBITDA, a 20 percent return on the asset.
Stifel assigns $2-$3 per share in value to the property and believes that National Harbor is not yet priced into MGM's shares. "We reiterate out Buy rating and $28 target price on MGM shares, as we believe current levels present investors with an opportunity to harvest outsized returns over near-to-intermediate term investment horizons," analysts explained in the report.
Other regional names could lose customers to the new resort. Boyd Gaming Corporation (NYSE: BYD) has heavy exposure to the Atlantic City market. Penn National Gaming, Inc's (NASDAQ: PENN) Hollywood Casino in Charles Town, West Virginia, will also likely have to compete with the National Harbor. Finally, Baltimore properties such as Caesars Entertainment Corp's (NASDAQ: CZR) Horseshoe Casino could also take a big hit.
Latest Ratings for MGM
|Oct 2016||Argus Research||Upgrades||Hold||Buy|
|Aug 2016||Buckingham Research||Initiates Coverage on||Buy|
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