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MGM: What Happened?

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In a report published Tuesday, Brean Capital analysts maintained a Buy rating on MGM Resorts International (NYSE: MGM), with a price target of $27.

The company reported lackluster results for 1Q15, against the backdrop of Macau weakness and Strip EBITDA pressure. MGM's revenue stood at $2.33B, representing an 11.3 percent decline y/y, missing the Brean Capital estimate of $2.41B and the consensus of $2.40B. Adjusted EPS was reported at $0.26, beating the estimate and Street consensus.

In the report Brean Capital noted, "We knew the ConAg convention comp from 1Q14 would be tough, but we were a little caught off-guard by the EBITDA pressure at most of MGM's properties along The Strip...In Macau, results were modestly below our expectations, although we were encouraged to see how much mass market business has become for MGM - about 50% of revenue and 80% of EBITDA."

"Assuming no further delays at MGM Cotai, MGM National (Washington DC) and with the numerous projects along the Las Vegas Strip (The Arena, The Park, Rock-In-Rio, etc.), 2017 is shaping up to be a stellar year," the analysts said.

Investors should be patient and look for dips to invest in shares. Investors may be "handsomely rewarded" in about a year, as the company's EBITDA begins to ramp. Gaming investors need to think longer term and look past "near-term headwinds in Macau" and focus on "new developments at the company in the US," the analysts added.

Latest Ratings for MGM

Jan 2018JefferiesInitiates Coverage OnBuy
Nov 2017NomuraMaintainsBuy
Nov 2017JP MorganMaintainsOverweight

View More Analyst Ratings for MGM
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Posted-In: Brean CapitalAnalyst Color Reiteration Analyst Ratings


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