MGM Resorts (MGM) Stock Increases on UBS Upgrade

MGM Resorts (MGM) stock is up in late morning trading on Monday, following an upgrade to 'buy' from 'neutral' at UBS this morning.
By Rachel Graf ,

NEW YORK (TheStreet) -- MGM Resorts (MGM) - Get Report stock is higher by 2.16% to $23.69 in late morning trading on Monday, after an upgrade to "buy" from "neutral" at UBS this morning. 

The firm raised its price target to $27 from $23 on the stock.

On Thursday MGM announced plans to create a real estate investment trust (REIT), and properties that put real estate into an REIT make roughly $1 billion in EBITDA, UBS analysts said in a note, according to Barron's.

The casino operator plans to use the REIT to raise funds through a fiscal 2016 first quarter initial public offering, which could possibly raise enough money to counteract $700 million to $1 billion in debt, UBS adds, Barron's reports.

Casino hub Macau's weak VIP gambling growth is priced into MGM earnings, so the company could potentially gain from any growth from the city, UBS notes, Barron's adds.

Additionally, on Thursday MGM reported earnings of 12 cents per share on $2.28 billion in revenue for the 2015 third quarter. Analysts surveyed by Thomson Reuters had forecast for earnings of 4 cents per share on revenue of $2.3 billion.

Separately, TheStreet Ratings team rates MGM RESORTS INTERNATIONAL as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate MGM RESORTS INTERNATIONAL (MGM) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

You can view the full analysis from the report here: MGM

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