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Macau Momentum Drives MGM Stock Higher with Wall Street's Earnings Praise

Macau Momentum Drives MGM Stock Higher with Wall Street's Earnings Praise
Macau Momentum Drives MGM Stock Higher with Wall Street's Earnings Praise
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Macau Momentum Drives MGM Stock Higher with Wall Street's Earnings Praise

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Macau Momentum Drives MGM Stock Higher with Wall Street's Earnings Praise

MGM Resorts Surges in Q1

MGM Resorts International reported a strong first-quarter performance, with adjusted earnings of 74 cents per share, surpassing analysts' expectations of 56 cents per share. Net revenue grew up 13% to $4.4 billion, outpacing the consensus estimate of $4.24 billion.

Factors Driving Growth

Management attributed this outperformance to robust demand at high-end Las Vegas properties and a remarkable 71% revenue growth at MGM China, reaching $1.1 billion for the quarter. The company continues to benefit from eased travel restrictions related to COVID-19.

Analyst Assessments

According to J.P. Morgan's Joseph Greff, MGM's momentum in Macau is expected to drive property-level EBITDA higher, projecting $1.17 billion for 2024, up from the current Wall Street estimate of $1 billion. Greff reaffirmed an Overweight rating on the stock and raised the price target to $57 from $54, implying a significant 43% gain.

Mizuho analyst Ben Chaiken emphasized that investors are undervaluing MGM's stock considering its compelling fundamentals and potential for improved free cash flow, which currently stands at $377 million. Chaiken reiterated a Buy rating and raised the price target to $62.

Market Reaction

Following the earnings report and analysts' comments, MGM's stock surged 6.2% to $42.22 in premarket trading on Thursday.

Conclusion

Despite a strong Q1 performance and bullish analyst sentiments, MGM Resorts International continues to be undervalued according to market analysts, signaling potential growth opportunities for investors.

Companies3 in the news

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