On Thursday, Deutsche Bank updated its outlook on MGM Resorts International (NYSE:MGM), increasing the stock's price target from $53.00 to $57.00 while keeping a Buy rating on the shares. The adjustment comes after the company's recent earnings release and subsequent management commentary, which addressed key investor concerns.
The analyst noted that management's discussion was particularly significant in influencing short-term stock movement. Key takeaways from the management included expectations of growth in Las Vegas EBITDAR from the second to the fourth quarter of 2024, a steady market share in Macau in the mid to high teens, and better-than-expected results from the partnership with Marriott, which is now estimated to add approximately $150 per room night, up from the $100 previously anticipated.
Furthermore, the company emphasized its focus on cash flow and commitment to returning capital to shareholders, despite acknowledging that upcoming capital expenditure needs may impact these returns later in the year. The stability of regional markets was also highlighted as a positive factor.
The analyst expressed that the recent earnings report provided some relief to investors, especially given MGM's domestic performance, which surpassed forecasts. Macau's results were significantly better than expected.
The overall positive earnings print, coupled with the company's performance relative to the market so far this quarter—showing a decline of 15.8% versus the S&P 500's 4.5% drop—suggests a potential upward trajectory for MGM's stock price.
InvestingPro Insights
As MGM Resorts International (NYSE:MGM) garners a positive outlook from Deutsche Bank, real-time data and insights from InvestingPro further enrich the investment narrative. MGM's aggressive share buyback strategy underscores management's confidence in the company's value, as reflected in the market cap of $12.6 billion.
While analysts have revised earnings downwards for the upcoming period, the company's solid fundamentals, with a P/E ratio of 12.48 and a revenue growth of nearly 18% over the last twelve months as of Q1 2024, suggest underlying strength.
InvestingPro Tips highlight that the company's liquid assets surpass short-term obligations, which may provide some cushion against market volatility. Moreover, despite not paying dividends, MGM has been profitable over the last twelve months, with a basic EPS (Continuing Operations) of $2.62. The company's stock has seen a decline over the last month, yet analysts predict profitability for the year, indicating potential for recovery.
For investors seeking comprehensive analysis, there are additional InvestingPro Tips available that could provide deeper insights into MGM's financial health and market performance. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the full range of expert tips to inform your investment decisions.
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