On Monday, Seaport Global Securities began coverage on shares of MGM Resorts International (NYSE:MGM) with a Buy rating and set a price target of $56.00. The firm's analyst cited a valuation based on a sum of the parts, which implies a multiple of 12.4 times the estimated 2024 EBITDA and 11.1 times the estimated 2025 EBITDA, fully accounting for the fair value of minority interests.
The analyst's assessment includes approximately $11 per share for BetMGM, noting that this figure is at a discount to the valuation of competitor DraftKings (NASDAQ:DKNG). Additionally, the current price target does not factor in any potential value from operations in Japan, which the analyst suggested could add roughly $5 per share based on their valuation.
MGM Resorts International's stock price target of $56.00 reflects a positive outlook on the company's financial performance and growth prospects. The analysis by Seaport Global Securities points towards a robust potential for the hospitality and entertainment giant, particularly through its online gaming division, BetMGM.
The valuation also underscores the competitive positioning of BetMGM in the market, as it is valued lower than DraftKings, indicating room for growth or re-rating in the future. While the Japanese market's potential value is acknowledged, it is not included in the current price target, suggesting additional upside if MGM successfully capitalizes on opportunities in Japan.
Investors and market watchers will closely monitor MGM Resorts' performance against these expectations, as the company aims to leverage its assets and strategic initiatives to deliver value. The Buy rating from Seaport Global Securities highlights confidence in MGM Resorts' ability to outperform and achieve the set price target based on the firm's financial projections and market analysis.
InvestingPro Insights
As we delve deeper into the financial health and performance of MGM Resorts International, InvestingPro data reveals a company with a robust revenue growth of 23.21% over the last twelve months as of Q4 2023, indicating a strong upward trajectory in its financial performance. The company’s market capitalization stands at $13.47 billion, with a price-to-earnings (P/E) ratio of 13.18, which is lower than the adjusted P/E ratio for the same period at 15.45, suggesting a potentially more attractive valuation for investors.
One of the notable InvestingPro Tips for MGM is the aggressive share buyback management has been undertaking, which could indicate confidence in the company's future and potentially lead to an increase in shareholder value. Furthermore, analysts predict MGM will be profitable this year, which aligns with the positive sentiment expressed by Seaport Global Securities.
For investors considering MGM's prospects, it is also significant that the company's liquid assets exceed short-term obligations, providing financial stability and the ability to meet immediate liabilities. While MGM does not pay a dividend to shareholders, the large price uptick over the last six months of 27.06% reflects a strong market performance that might compensate for the lack of dividend income.
Those interested in further insights can find additional InvestingPro Tips for MGM Resorts International at https://www.investing.com/pro/MGM. To enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 5 more tips available on InvestingPro, investors can gain a comprehensive understanding of MGM's potential and make informed decisions.
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