BTIG analysts started coverage on MGM Resorts (NYSE:MGM) with a Buy rating and a $52 price target on the stock.
The analysts highlighted the attractive fundamental story, favorable risk/reward ratio, and mixed investor sentiment as key factors for the initiation. They see potential for upward revisions in estimates driven by positive performance in Las Vegas and China, along with healthy capital returns, possibly bolstered by dividends from China and regional property sales.
The analysts noted that the current valuation of MGM’s Vegas operations, at approximately 8 times 2024 EBITDA, does not fully reflect the company’s strong fundamentals. They expect this multiple to expand as concerns about Vegas diminish and financial performance improves. Additionally, the analysts believe the market is underestimating the growth potential of MGM’s international digital operations, which could see 2-4 times higher revenue and EBITDA performance compared to current consensus in the coming years.
The analysts also pointed to MGM’s expanding diversification, with opportunities in Japan and other projects like New York potentially materializing over the next two years, which could further enhance growth.
Overall, the analysts see multiple avenues for shareholder gains in both the near and long term as MGM continues to grow and diversify its operations.