MGM: Long-Term Growth Outlook Despite Short-Term Headwinds
Date: 2024-10-03 Author: Robert Beloved Categories: PAYMENT SOLUTIONS
MGM Resorts shares are now down more than 10% year-to-date, according to Wednesday’s market close. Despite this negative momentum and other short-term headwinds, the analyst highlights the company’s long-term growth prospects.
MGM’s Short-Term Headwinds
Deutsche Bank analyst Carlo Santarelli, who recently commented for Casino.org, pointed to the slow movement of MGM shares despite their 9.18% gain over the past month. The company’s shares closed at $39.62, down 12.88% from where they started the year.
Despite this, Santarelli remains optimistic, emphasizing that while short-term headwinds could impact MGM in the third quarter, a surprising gain is expected in the fourth quarter. As for the stock price target, the analyst lowered it from $57 to $52. While it is a cut, the target price is still 31.2% higher than the current price as of Wednesday’s market close.
Santarelli suggested that MGM, like other operators, may not show impressive gross gaming revenue (GGR) numbers for September. He attributed this to the fact that last September was an extra week compared to the current year. Moreover, he pointed to the expected solid performance of operators on the Las Vegas Strip and noted that MGM’s baccarat win was down 34% in August.
Rocket Stretch Factors for the Company
On the other hand, Santarelli expressed hope for positive changes in the fourth quarter of this year. He explained: “We do not believe that the trends in Las Vegas in the fourth quarter of 2024 are as bleak as is being suggested. In fact, the negative expectations for Las Vegas are likely due to comparability issues that were evident several months ago rather than changes in demand.”
MGM recently applied for a casino license in Abu Dhabi. While the ambitious project in the United Arab Emirates does not include casino space, MGM is willing to make changes to the project to add gaming amenities if it is approved.
In addition, according to the analyst, MGM is working on other initiatives that could provide long-term growth. One such project is the construction of Japan’s first integrated resort in Osaka.
In addition, according to Santarelli, MGM’s plans to obtain a casino license in New York and renovate Empire City Casino could be important catalysts for the company’s growth.
