By Michael Elkins
Barclays initiated coverage of MGM Resorts (NYSE:MGM) with an Overweight rating and a $59.00 price target on the stock.
Barclays sees MGM as a global leader in premium gaming, with an unmatched combination of market breadth and premium brand positioning across both land and digital, with shareholder-friendly management, and a very attractive FCF yield valuation implied for its core business.
Barclays initiated coverage on the company at Overweight as MGM has an attractive premium position in both Las Vegas as well-as U.S. regionals. Over halfway through 1Q23, Barclays is incrementally bullish on Las Vegas’ ability to weather a softer macro backdrop in 2023. However, analysts at Barclays remain less positive on the set-up for U.S. regionals, and still bullish on the ongoing recovery of Macau.
They also believe that the company’s JV BetMGM’s U.S. iGaming position is second to none. BetMGM, MGM’s JV with Entain, has built a dominant position in the nascent, but promising, U.S. iGaming business.
They wrote in a note, “We are bullish on the longer term outlook for iGaming in U.S., based on to-date revenue generation capability and growth across early markets, with only modest cannibalization, and believe further legalization is an inevitability over the next 2-5 years. MGM’s recent acquisition of LeoVegas (built out separately in our model) adds talent and flexibility to MGM’s global digital strategy and confirms management’s resolve in pursuing this long-term global opportunity.”
Shares of MGM are down 1.45% in mid-day trading on Friday.