Updated:
Original:

MGM Resorts Stock Surges On Credit Suisse Upgrade; DraftKings Nears Entain Bid Deadline

MGM Resorts shares hit a fresh record high after Credit Suisse upgrade Tuesday, while its U.S. rival DraftKings may need to pay more for British gaming group, and MGM partner, Entain.

MGM Resorts International  (MGM) - Get MGM Resorts International (MGM) Report shares hit a fresh record high Tuesday after analysts at Credit Suisse boosted their rating on the gaming group and its U.K.-based partner posted stronger-than-expected third quarter revenues. 

Credit Suisse analyst Benjamin Chalken lifted his rating on MGM to 'outperform', from 'neutral', and more than doubled his previous price target to $68 per share, noting investors haven't properly valued a series of transactions he says have "transformed" the gaming group. 

MGM's $4.4 billion property sale, its consolidation of CityCenter from Infinity World for $2.1 billion, a real-estate sale in Massachusetts and the purchase of the operations of the Cosmopolitan in Las Vegas for $1.6 billion should give MGM a "cleaner more simplified organization with a more attractive capital structure" supported by improving sentiment and gaming industry upside.

MGM Resorts shares Tuesday closed 1.6% lower at $47.47, a move that would extend the stock's year-to-date gain to around 50%. The stock hit a record high of $47.97 earlier in the session.

MGM could also benefit from the stronger-than-expected third quarter update posted Tuesday by British bookmaker Entain Plc, its U.S. joint-venture partner and target of a $22.4 billion takeover bid by gaming rival DraftKings  (DKNG) - Get DraftKings Inc. (DKNG) Report.

TheStreet Recommends

DraftKings shares closed 0.4% higher at $48.84.

Gambling Tax: How Much You Will Pay For Winning?

Entain told the London Stock Exchange Tuesday that it September-quarter gaming revenues rose 4% from last year, and stuck to its forecast of full-year earnings in the range of £850 million to £900 million.

DraftKings has until October 19 to formalize its £28 per share bid for Entain, which operates the Coral and Ladbrokes betting shops in the U.K. market and has a valuable U.S. venture with MGM "where we are now challenging for the number one market position", according to CEO Jette Nygaard-Andersen. 

That bid is more than double the $11 billion approach MGM itself made earlier this year.

MGM said it's the "exclusive partner in the U.S. online sports betting and iGaming market", through its BetMGM joint-venture, adding that "any transaction whereby Entain or its affiliates would own a competing business in the U.S. would require MGM's consent."

"MGM will engage with Entain and DraftKings, as appropriate, to find a solution to the exclusivity arrangements which meets all parties' objectives," the group said in a statement late last month.