Gold prices slip slightly after recent gains; U.S. data eyed
Investing.com - Goldman Sachs initiated coverage on MGM Resorts (NYSE:MGM) with a Sell rating and a price target of $34.00 on Monday. The target aligns with InvestingPro’s analysis, which indicates the stock is currently trading above its Fair Value, with technical indicators suggesting overbought conditions.
The investment bank cited concerns about MGM’s significant lease burden and upcoming capital expenditure cycle for projects that are not scheduled to open in the near-to-medium term, including developments in Japan expected after 2030. These concerns are particularly notable given MGM’s already substantial debt-to-equity ratio of 11.17x.
Goldman Sachs expressed a negative outlook on the risk/reward profile for MGM Resorts in the current macroeconomic environment, specifically pointing to pressure on free cash flow generation.
The firm expects these free cash flow challenges to weigh on MGM’s capital returns to shareholders, potentially impacting the company’s valuation in the market.
MGM Resorts, a major player in the casino and hospitality industry, operates properties across Las Vegas, regional U.S. markets, and internationally, with significant expansion plans in Japan representing a major long-term investment commitment.
In other recent news, MGM Resorts International reported a first-quarter earnings per share of $0.69, surpassing consensus estimates by $0.23, with revenues totaling $4.3 billion, slightly below estimates by $7 million. Despite a 3% decline in Las Vegas revenues, attributed to lower average daily room rates, MGM saw increased casino revenue due to higher win rates in table games and slots. CFRA adjusted its rating for MGM Resorts from Buy to Hold, lowering the price target to $31, while raising the 2025 earnings per share estimate to $3.30. Stifel also revised its price target for MGM Resorts to $44, maintaining a Buy rating, citing potential economic challenges despite strong current performance indicators. Conversely, Citi raised its price target to $52, maintaining a Buy rating, reflecting confidence in MGM’s strategic initiatives and strong performance. The company is focusing on enhancing EBITDA, with significant revenue and cost-saving measures anticipated to contribute to this goal. MGM Resorts is also progressing with its Osaka project, with an increased investment commitment, and plans to submit a proposal for a New York development in June 2025. Citizens JMP maintained a Market Outperform rating with a price target of $45, noting a slight uptick in short-term bookings in Las Vegas, which MGM is monitoring closely.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.