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MGM Resorts Stock Up 9.61%, Credit Suisse Upgrade MGM to Outperform from Neutral

UTC by Steve Muchoki · 2 min read
MGM Resorts Stock Up 9.61%, Credit Suisse Upgrade MGM to Outperform from Neutral
Photo: MGM Resorts / Facebook

MGM stock has gained approximately 130.87%, 54.52%, 21.82%, and 20.57% in the past year, YTD, three months, and one month respectively.

MGM Resorts International (NYSE: MGM) stock jumped over 9% yesterday after Credit Suisse upgraded the casino stock to outperform from neutral. The firm said MGM’s new operations and solid cash flow should make the stock attractive to investors. “MGM has gone through a transformation, recently announcing four transactions, and we believe the market is not giving full credit,” Credit Suisse said.

As of October 12, 2021, 7:59 p.m EDT, MGM stock traded around $48,60, down approximately 0.18%. According to market analytics provided by MarketWatch, MGM stock has gained approximately 130.87%, 54.52%, 21.82%, and 20.57% in the past year, YTD, three months, and one month respectively through Tuesday.

Besides upgrading MGM stock rating, Credit Suisse analyst Benjamin Chaiken raised MGM price target from $33 to $68. According to Chaiken, MGM is much more organized and utilizes cleaner energy than before. Moreover, the firm has an attractive capital structure that most investors are ready to put their money into.

Notably, Chaiken highlighted four recent activities that will eventually lead to the success of MGM growth. One is the sale of its 42% stake in MGM Growth Properties LLC (NYSE: MGP) for $4.4 billion, which is a major deleveraging event.

Second is the consolidation of the operations of City Center, which was not getting full value. Thirdly, is the sale-leaseback of its property in Springfield, which was also a deleveraging event. The last is the purchase of the operations of Cosmopolitan in Las Vegas.

MGM Stock and the Market Outlook

Further, Chaiken noted that the company is poised for higher earnings in the next two years. Precisely, he projected the EBITDAR and earnings for 2021 and 2022 at $2.2 billion and $3.4 billion respectively. Additionally, he estimated a negative 35 cents per share and $1.79 per share for the next two years respectively.

The company has a market valuation of approximately $21.41 billion, with 481.88 million outstanding shares. In the past 52 weeks, MGM shares have ranged between $19.55 and $48.94. Having streamlined its business structure, Wall Street analysts are optimistic the company will continue rallying further in the coming quarters.

According to a survey conducted by MarketWatch, MGM shares received an average rating of Over from 15 ratings. Out of which, the average recommendation was Overweight. Notably, the average target price from the 15 ratings of MGM shares was $50.08.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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