Shares of MGM Resorts (MGM) - Get MGM Resorts International (MGM) Report traded higher Tuesday after analysts at J.P. Morgan upgraded the casino operator to overweight from neutral, saying "momentum at its domestic casinos, particularly in Las Vegas," continues to "build revenues and margin improvement."
Shares of the Las Vegas company at last check rose 4.1% to $40.35.
J.P. Morgan also attributed the upgrade to an 11% pullback in the stock price over the past month.
MGM’s stock has pulled back to $38 from $43 after a profit-taking run, J.P. Morgan analysts said.
J.P. Morgan analysts Joseph Greff, Omer N. Sander and Brandt Montour were confident of an increased recovery in the group's business due to "higher vaccination rates, and no capacity restrictions."
MGM’s "regional properties have benefitted from: pent-up demand, lack of alternative entertainment options and stimulus checks in March/April," Greff, Sander and Moutour wrote in a note published Tuesday.
J.P. Morgan raised its price target on the stock to $47 from $45.
Greff, Sander and Moutour also noted that the current valuation of MGM Resorts doesn’t give "much, if any credit, for its 50% interest in [online sports betting platform] BetMGM."
J.P. Morgan also said MGM has continued to build digital market share momentum with strong iCasino and sports betting share.
"We remain impressed with BetMGM’s market share in sports betting and iGaming," they wrote.
"For sports betting, for publicly reported [gross gaming revenue] reports in April, ... BetMGM had 11%, 15%, and 22% market share in New Jersey, Indiana, and Michigan, respectively."
MGM has six buy ratings, 10 holds and one sell, according to Bloomberg data.