MGM Resorts Stock Price Target Cut at Goldman Sachs

NEW YORK (TheStreet) -- MGM Resorts International (MGM) stock price target was lowered by analysts at Goldman Sachs to $21 from $22.

This action follows the company's release of mixed first quarter results in early May. The company reported revenue of $2.33 billion for the first quarter, or 33 cents per share, compared to revenue of $2.6 billion, or 22 cents per share in the same quarter last year.

The hospitality company was expected to earn 13 cents per share on revenue of $2.4 billion, according to analysts polled by Thomson Reuters.

"MGM China has been a tremendous investment for our company," CEO Jim Murren said.

"And while the market is currently going through obviously its only challenges, we are confident that our investments in Macau will continue to benefit our employees, the citizens of Macau and our company," he added.

MGM Resorts, headquartered in Nevada, is a hospitality and entertainment company.

Shares of MGM Resorts are increasing 0.98 % to $19.66 in afternoon trading on Monday.

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 growth in earnings per share, increase in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MGM RESORTS INTERNATIONAL reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, MGM RESORTS INTERNATIONAL continued to lose money by earning -$0.33 versus -$0.35 in the prior year. This year, the market expects an improvement in earnings ($0.50 versus -$0.33).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Hotels, Restaurants & Leisure industry. The net income increased by 65.5% when compared to the same quarter one year prior, rising from $102.65 million to $169.85 million.
  • 37.74% is the gross profit margin for MGM RESORTS INTERNATIONAL which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.28% trails the industry average.
  • MGM has underperformed the S&P 500 Index, declining 20.20% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, MGM RESORTS INTERNATIONAL's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: MGM Ratings Report

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