MGM Stock Off, Analyst Comment Mixed After Earnings

MGM Resorts shares fall and analyst comment is mixed after the casino company’s third-quarter-earnings report.
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MGM Resorts (MGM) - Get Report shares declined Friday after analysts offered mixed commentaries on the casino company’s third-quarter-earnings report.

MGM’s revenue trailed analysts’ forecasts in the third quarter. Global property Ebitdar data were mixed.

The shares recently traded at $20.01, down 6%. The stock has slumped 40% year to date amid the coronavirus pandemic, which kept casinos closed for months and has scared people from visiting them.

Bernstein analysts rate the stock market perform with a price target of $17.60. Third-quarter-earnings woes stemmed from weak revenue in Las Vegas, they wrote in a commentary cited by Bloomberg.

At the regional level, MGM casinos are benefiting from the lack of many entertainment alternatives amid the pandemic, Bernstein analysts said. Still, they said, it’s unclear whether recent gains are sustainable, particularly with covid picking up again.

Jefferies analysts have a hold rating and a $22 share-price target. “The upside surprise in Las Vegas [adjusted property Ebitdar], coupled with incremental clarity around sports and digital strategies, should have a positive effect on the shares,” they said in a commentary cited by Bloomberg. (Ebitdar is earnings before interest, taxes, depreciation, amortization and restructuring/rent.)

But that strength is “balanced by near-term headwinds and uncertainties in the trajectory of recovery in Macau and Las Vegas,” the analysts said.

Stifel analysts have a hold rating and lifted their share-price target to $23 from $18. 

MGM’s operating numbers in the third quarter were “slightly better than expected,” they said, according to Bloomberg. But investors won’t “throw their full support behind the shares” until it’s clear that Las Vegas will recover soon.