NEW YORK (TheStreet) -- MGM Resorts (MGM) was falling 2.14% to $25.80 on Wednesday after J.P. Morgan downgraded MGM China, which MGM controls, to Neutral.
J.P. Morgan started to turn around on Macau casinos in its report, saying that the stocks appear to be fairly valued at this point. According to Barron's, the sector has posted an average gain of 137% since the start of 2013.
"Valuations have yet to hit 'bubbly' levels in our view (21x FY14E P/E, against 20% earnings growth), but multiples have expanded significantly, and the sector has also just seen a wave of Streets upgrades, (notably) more analysts are starting to factor in more aggressive growth assumptions and using DCF to justify valuations," the J.P. Morgan report reads. "After adjusting price targets to take into account the new casino projects and FY14/15E estimates, we recommend that investors trim positions."
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. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and weak operating cash flow."