Despite Headwinds for MGM, Analyst Sees Long-Term Growth Potential

MGM Resorts’ shares marked a more than 10% decrease year-to-date as of the market close on Wednesday. Despite the decrease and other short-term challenges an expert is optimistic about the company’s long-term growth prospects.

MGM Faces Short-Term Challenges

Carlo Santarelli, an analyst with Deutsche Bank, who was recently quoted by Casino.org, spoke about the company’s stocks which have been sluggish, despite the 9.18% increase since the last month. Closing at $39.62, MGM’s stocks marked a 12.88% decrease year to date.

Despite stock movements, Santarelli was optimistic, pointing out that while challenges may impact MGM in the third quarter, an unexpected increase may come during the fourth quarter of the year. Focusing on MGM’s price target, the analyst reduced it from $57 to $52. While that’s a decrease, the price target was still a 31.2% premium on the stock’s price as of the market close on Wednesday.

Santarelli predicted that MGM, along with other operators, may not post impressive gross gaming revenue (GGR) figures for September. He explained that this is because last September had an extra weekend when compared to this September. Moreover, he pointed to the expected on-par performance of Las Vegas Strip operators and acknowledged the impact of the baccarat win for MGM which marked a 34% decrease in August.

Several Growth Catalysts Can Propel the Company’s Position

On the bright side, Santarelli was optimistic about the year’s last quarter. He explained: “We do not believe 4Q24 trends in Las Vegas are as ominous as most believe. In fact, we believe the majority of the negative sentiment around Las Vegas is largely due to the comp stack challenges, which were evident months ago, more so than a distinct change in the cadence of demand.”

Recently, MGM submitted an application for a casino license in Abu Dhabi. The company’s ambitious project in the United Arab Emirates doesn’t include a casino space. Yet, MGM is prepared to implement changes to the project to accommodate gaming amenities, if that’s permitted.

Besides the potential of this project, according to the analyst, MGM is engaged in other initiatives that may bring long-term growth. One such initiative is the company’s project in Osaka, where the first integrated resort in Japan would be built.

On the other hand, according to Santarelli, MGM’s intentions to secure a casino license in New York and revamp its Empire City Casino can also become a major growth catalyst.