On Tuesday, BTIG initiated coverage on MGM Resorts International (NYSE:MGM) with a Buy rating and a price target of $52.00. The firm highlights an attractive fundamental backdrop for MGM, noting the potential for upward revisions of estimates due to performance in Las Vegas and China. BTIG anticipates healthy capital returns, bolstered by potential dividends from China and possible sales of regional properties.
The analyst points to a valuation of MGM's Las Vegas operations at approximately 8 times the projected 2024 EBITDA, or around 5 times when adjusting lease liabilities. This valuation, according to BTIG, indicates that the current market price does not fully reflect MGM's fundamentals. They expect the valuation multiple to increase as concerns regarding Las Vegas subside and financial projections improve.
Beyond the core segments of MGM's business, BTIG also draws attention to the underappreciated potential of MGM's digital operations overseas. The firm predicts that the revenue and EBITDA for this segment could outperform consensus estimates by two to four times as the business expands.
The coverage further includes MGM's prospects in Japan, which BTIG estimates could add approximately $5 in net present value (NPV) per share. Additionally, the firm looks forward to MGM's growth opportunities in other projects that may emerge over the next two years, including prospects in New York.
In conclusion, BTIG sees MGM Resorts as a diversified and evolving story with multiple avenues for shareholder gains in both the short and long term. The firm's coverage suggests a positive outlook for MGM's performance and stock valuation in the future.
In other recent news, MGM Resorts International has been the subject of several analyst upgrades following its robust first quarter results for 2024. According to Susquehanna analyst Joseph Stauff, MGM's management has improved its focus on the company's outlook, leading to an upgrade from Neutral to Positive and an increased price target to $54. Deutsche Bank also maintained a Buy rating on MGM's shares and raised the stock's price target from $53.00 to $57.00, citing the company's recent earnings release and subsequent management commentary.
MGM Resorts reported a 13% increase in net revenues, reaching $4.4 billion in the first quarter of 2024. The company experienced significant growth in its operations in Las Vegas and Macau, along with substantial progress in its digital and international expansion strategies. MGM Resorts also announced plans for future investments in BetMGM, its digital business, and substantial share buybacks.
InvestingPro Insights
As we evaluate the potential of MGM Resorts International, real-time data from InvestingPro underscores the company's solid financial standing. MGM's market capitalization stands at a robust $13.28 billion, reflecting investor confidence. The P/E ratio, a measure of the company's current share price relative to its per-share earnings, is 16.14, suggesting a reasonable valuation compared to industry peers. Additionally, MGM's revenue growth over the last twelve months as of Q1 2024 has been impressive at 17.91%, indicating a strong upward trajectory in the company's earnings.
Two InvestingPro Tips that are particularly relevant to MGM's outlook include the aggressive share buyback strategy by management and the company's high shareholder yield. Share buybacks can signal management's belief in the company's undervalued shares and commitment to delivering value to shareholders, while a high shareholder yield may attract investors looking for tangible returns on their investments. It's noteworthy that analysts predict MGM will be profitable this year, which aligns with BTIG's optimistic view on the company's future performance.
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