MGM Resorts Downgraded On Lack Of Catalysts

Stifel analysts Steven Wieczynski and Brad Boyer downgraded MGM Resorts International MGM from Buy to Hold and decreased their price target from $38 to $33. They have also removed the stock from the Stifel Select List.

The analysts don't think the tragic shooting at Mandalay Bay is going to significantly impact the demand over the long term. It could only slow down the margin growth for the Strip.

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They decided to downgrade the stock because they're having a tough time identifying growth catalysts over the next 12 months. MGM Cotai opening is probably going to have a positive impact on growth, but investors are going to have to wait for several quarters before the property fulfills its potential.

Stifel analysts don't believe the margin growth and fundamental improvement story on the Strip are over and they didn't lose faith in management. They're only concerned that investors are going to lose interest in the stock, because of the short-term obstacles, which could lead to a range bound trading.

The analysts expect MGM Resorts to achieve $2.82 billion EBITDA in 2017, $3.11 billion EBITDA in 2018 and $3.41 billion EBITDA in 2019, which is lower than its prior estimate of $2.86 billion, $3.22 billion and $3.48 billion, respectively. Stifel expects the company is going to report its 3Q 2017 EBITDA, slightly above the consensus.