MGM Resorts: Why These Analysts Remained On The Sidelines Despite Strong Q4

MGM Resorts International (NYSE: MGM) reported its fourth-quarter revenues and margins ahead of Street expectations, with the beat being driven by its Las Vegas performance.

Morgan Stanley On MGM Resorts

Morgan Stanley analyst Thomas Allen maintained an Equal-Weight rating on the company while raising the price target from $52 to $56.

“Las Vegas meaningfully outperformed our expectations and while Omicron is having a short-term impact on 1Q, our old 2Q-4Q22 and 2023 revenue expectations look too low,” the analyst wrote.

While raising the Las Vegas EBITDAR estimates for 2022 and 2003, analyst Allen kept the Regionals EBITDAR forecasts largely unchanged. The Morgan Stanley analyst expressed concern, however, about BetMGM losing market share over the next 12 to 18 months and said there were “more attractive opportunities in our Gaming coverage.”

BofA Securities On MGM Resorts

Analyst Shaun Kelley reiterated a Neutral rating for MGM Resorts while keeping the price target unchanged at $55.

“MGM’s results were impressive in core Las Vegas, continuing a solid trend of Gaming earnings and margins,” the analyst wrote. He added, however, that the core upside in Las Vegas is offset by first-quarter softness, reductions to Macau estimates and slightly higher BetMGM losses.

Analyst Kelley added that the “domestic recovery potential and sports betting/iGaming upside potential” are offset by near-term headwinds for the businesses at the Strip and in Macau, an “increasingly complicated corporate structure” and “limited ownership/control of the online opportunity.”

MGM Price Action: Shares are down 0.70% at $48.18 Thursday at publication.