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On Thursday, CFRA analyst Zachary Warring upgraded MGM Resorts (NYSE:MGM) International’s stock rating from Hold to Buy and increased the price target from $42.00 to $45.00. This adjustment reflects a more optimistic outlook for the company’s financial performance over the next year. According to InvestingPro data, MGM currently trades at a P/E ratio of 13.9x and maintains a "GOOD" overall financial health score, suggesting solid fundamentals despite recent market volatility.
The upgrade comes after MGM Resorts reported its fourth-quarter earnings, which showed a normalized EPS of $0.45 compared to $1.06 in the same quarter of the previous year. The EPS was $0.11 higher than consensus estimates, with revenues reaching $4.35 billion, surpassing estimates by $80 million. Despite a year-over-year decline in Las Vegas revenues by 6%, the company saw growth in other segments. Regional revenues grew by 7%, MGM China (OTC:MCHVY) by 4%, and Digital by 15%. InvestingPro analysis reveals the company achieved nearly 7% revenue growth over the last twelve months, with total revenue reaching $17.2 billion.
Warring cited the company’s share buyback program as a significant factor in the upgrade. MGM Resorts has repurchased 40% of its shares since 2021 and continues to buy back its stock aggressively. The analyst believes that this strategy minimizes the downside risk for the company’s stock. This aligns with an InvestingPro Tip highlighting management’s aggressive share buyback strategy, which has contributed to a high shareholder yield. For deeper insights into MGM’s financial strategy and access to additional ProTips, investors can explore the comprehensive Pro Research Report available on InvestingPro.
In addition to the rating upgrade, CFRA raised its 2025 earnings per share (EPS) estimate for MGM Resorts by $0.20 to $3.20 and initiated a 2026 EPS estimate at $3.60. The price target is based on 8.9 times the firm’s 2025 adjusted EBITDAR estimate, which is below the company’s three-year average forward EV/EBITDAR multiple of 10.0 times.
Adjusted EBITDA for the fourth quarter declined by 16.4% year-over-year, primarily due to the high success of the F1 Las Vegas event in the previous year. Despite this, CFRA’s outlook for MGM Resorts is positive, with the firm expressing confidence in the stock’s performance leading up to 2025.
In other recent news, MGM Resorts International has seen a flurry of activity from analyst firms. Mizuho (NYSE:MFG) Securities has increased its price target for MGM Resorts from $56 to $60, maintaining an Outperform rating. This is based on the firm’s belief in MGM’s potential for YoY growth, despite high company projections. Mizuho’s analysis anticipates MGM Resorts to achieve approximately $80 million in cost savings by 2024.
Simultaneously, Truist Securities reiterated a Buy rating for MGM, with a steady price target of $50. Analyst Barry Jonas attributed MGM’s surpassing of EBITDAR expectations to strong results from regional operations and the Macau segment, and a positive outlook for the first quarter in Las Vegas.
Stifel analysts also demonstrated confidence in MGM, raising the price target to $50 from $47, and sustaining a Buy rating. Their analysis anticipates robust forward bookings for group and convention events, which could bolster investor interest.
Citi analyst George Choi increased MGM’s price target to $50 from $48, reiterating a Buy rating. Choi’s report highlighted MGM’s strong performance and management’s positive outlook, particularly in Las Vegas.
Lastly, JMP Securities maintained a Market Outperform rating and a $50 price target for MGM, highlighting a significant YoY increase in EBITDAR, particularly in regional markets. The firm also noted the potential value creation through MGM’s digital business segment.
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