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Investing.com - UBS has reduced its price target on MGM Resorts (NYSE:MGM) to $39.00 from $44.00 while maintaining a Neutral rating on the stock. Currently trading at $35.95, MGM shows a ’GOOD’ overall financial health score according to InvestingPro analysis, with the stock currently trading near its Fair Value.
The adjustment follows MGM’s indication that its third-quarter performance in Las Vegas would resemble second-quarter results, which showed a 9% decline in EBITDA. UBS analysis suggests the underlying trend may be worse than initially apparent. Despite these challenges, MGM maintains profitability with $17.2 billion in revenue over the last twelve months and a healthy gross profit margin of 45%.
UBS notes that while MGM’s second-quarter decline included approximately $60 million in one-time factors—$20 million from room renovations at the Grand property, $20 million from low hold, and $20 million from an underperforming high-end event—the underlying EBITDA decline was only 2% when excluding these items.
For the third quarter, after accounting for $25 million in room renovation disruption at the Grand, the projected 9% EBITDA decline represents an underlying 5% decrease, indicating deterioration from the second quarter’s adjusted performance.
UBS observed that second-quarter performance weakened sequentially from April to June, with particular softness in June continuing into July, while August and September are showing only modest improvement over previous months.
In other recent news, MGM Resorts International reported impressive financial results for the second quarter of 2025, surpassing both earnings and revenue expectations. The company achieved an earnings per share of $0.79, which exceeded the forecasted $0.55, marking a 43.64% surprise. Revenue also topped projections, reaching $4.4 billion compared to the anticipated $4.31 billion. Meanwhile, Mizuho has adjusted its price target for MGM Resorts to $58.00 from $59.00, maintaining its Outperform rating. The firm highlighted a valuation issue, noting that MGM’s core operations are trading at less than four times EBITDA. Additionally, MGM Resorts announced that Chief Operating Officer Corey Sanders will retire at the end of 2025 after a 30-year tenure. Sanders will continue in his current role through December 2025 and then serve as an advisor until the end of 2026. The company plans to name a successor later this month.
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