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MGM Analysts React After Casino Operator Posts Q4 Sales Beat

February 14, 2019 3:29 pm
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Shares of MGM Resorts International (NYSE:MGM) are falling despite reporting a fourth-quarter sales beat on Wednesday.

The casino operator reported fourth quarter adjusted earnings of 11 cents per share, falling in-line with consensus estimates. Sales came in at $3.053 billion, beating estimates by $83 million.

The Analysts

Morgan Stanley's Thomas Allen maintained an Overweight rating on MGM with a $34 price target. 

Credit Suisse's Cameron McKnight maintained a Neutral rating with a $30 price target. 

The Thesis 

The Q4 results were ahead of expectations and were driven by stronger Vegas, regional and Macau perfromance, Allen said in a Thursday note. 

“MGM’s 4Q results and 2019 commentary give us increased confidence that Vegas is in better shape than perceived following negative estimate revisions in ‘17 and 1H18," the analyst said. 

Morgan Stanley is increasingly confident that MGM is well-positioned to win a gaming license in Osaka, Japan.

Credit Suisse analyst Cameron McKnight was slightly less bullish on the company and said he prefers Caesars Entertainment Corporation (NASDAQ:CZR).

“Management is no longer providing forward guidance, but sounded cautious on the 1Q and 1H, given cost inflation, reduced Chinese visitation and a more uncertain leisure customer,” the analyst said. 

“That said, the outlook for convention attendance is strong, non-gaming revenue growth should remain sold and MGM noted full year Vegas estimates ‘seem reasonable,'" McKnight said.

The Price Action

MGM shares were down 6.84 percent at $27.23 at the time of publication Thursday. 

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Casinos Among The Hardest-Hit Businesses During Economic Downturns

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