Analysts Tout MGM's Swing To Q2 Profit On Las Vegas Recovery

MGM Resorts International (NYSE: MGM) beat the second-quarter earnings consensus by a wide view and a couple of analysts continued to tout the company's prospects.

Citigroup's Anil Daswani reiterated a Buy and $34 price target, citing a recovery in Las Vegas. Revenue from Las Vegas grew right percent to $1.35 billion, while Macau revenue fell one percent to $828 million.

"MGM should be the biggest beneficiary" of improved conditions in Las Vegas among large gaming companies," Dasswani said in a note Wednesday. MGM derives about half of its cash flow from operations there.

The company swung to a second-quarter profit of $0.21 per share, from a year-earlier loss of $0.19. Analysts expected earnings of $0.11 per share.

Although investors have worried that debt could leave MGM vulnerable to higher interest rates, Daswani said recent balance sheet improvements help assuage the concern.

Last month MGM cut the rate on its senior credit facility by 75 basis points due to improvements at its CityCenter project in Las Vegas.

Similarly Morgan Stanley's Mark Savino reiterated an Overweight rating and a $31 target, saying Las Vegas' recovery "remains on track."

Despite a one percent revenue decline in Macau, Savino said MGM's position there "continues to remain strong."

Along with second-quarter earnings, MGM said it will expand its Macau Cotai project by 700 rooms, although budget and timing details weren't nailed down.

Savino figures performance in both Macau and Las Vegas will be above the current consensus and that the company is "well positioned for stock appreciation."

MGM shares were down recently by 1.3 percent to $25.55.