Credit Suisse: MGM Is The Best Gaming Stock To Own

Credit Suisse analysts recommended that investors shy away from gaming stocks in favor of other leisure-based activities (lodging, cruise, theme parks and ski resorts). Yet, "if you have to own one, we are sticking with" MGM Resorts International (NYSE: MGM). Credit Suisse said that uncertainty in Macau over the next 12 to 24 months makes gaming stocks a "high risk tolerance" play.

Given that uncertainty, Credit Suisse said it continues to "view MGM as the best positioned large-cap gaming story" due to "leverage to a Las Vegas recovery" and regional pipeline. Credit Suisse also noted that MGM's current market valuation implies the "greatest negative sentiment" toward Macau.

See Also: Credit Suisse Cuts Macau Revenue Forecast Through 2016

Regarding MGM's current REIT conversion, the Credit Suisse analysts said it was "noise" and that MGM would be "best served by maintaining its current corporate structure." In the time it would take to spin off the REIT, Credit Suisse would expect MGM's organic growth to exceed that value.

On MGM's competitors, Credit Suisse said that it is "too late to capitulate" on Las Vegas Sands Corp. (NYSE: LVS). Long term, the analysts expect "tremendous value" in its Singapore and Macau mall portfolio. With Wynn Resorts, Limited (NASDAQ: WYNN), the analysts are "not ready to call the bottom." The results there, Credit Suisse argued, will get worse before they get better.

Credit Suisse placed an Outperform rating and $26 price target on MGM. The analysts also have a Outperform and $58 price target on Las Vegas Sands, while holding a Neutral and $125 price target on Wynn Resorts.

As of Thursday's closing price of $21.95, MGM has gained 2.7 percent this year. In the prior 52 weeks, the stock has declined 8.2 percent.