MGM Resorts' Shares Poised for Recovery, Predicts Financial Expert
In the world of gaming and hospitality, analyst Chad Beynon has identified several potential factors that could lead to a rebound in MGM Resorts' stock. These factors centre around the company's diversified business model, digital growth, and international opportunities.
Firstly, MGM's strong Las Vegas operations, which account for 58% of its EBITDAR, are a significant strength. Properties like Bellagio and Mandalay Bay have shown resilience, with strong slot play and high-roller segments. Ongoing property upgrades, such as the upcoming MGM Grand room remodel completion by October 2025, are expected to enhance guest experiences, boost occupancy, and improve margins, supporting asset optimization.
Secondly, MGM's digital growth, particularly through its BetMGM platform, is showing robust performance. The platform's 2Q and 1H 2025 net revenue rose about 35-36% year over year, and EBITDA growth has been impressive. BetMGM's strengthening strategic execution and increased player engagement are key drivers, highlighting MGM's digital expansion as a significant growth vector.
Thirdly, MGM is strategically investing in international markets such as Osaka (Japan) and Dubai, with capital expenditures expected to ramp up. These expansions offer long-term growth potential and diversification in revenue streams beyond U.S. gaming.
Supporting these factors, MGM enjoys a strong financial position with $1.96 billion in cash and ongoing share repurchases, reflecting capital discipline. The company's loyal customer base, exceeding 50 million members in its MGM Rewards program, is further expanding through partnerships like Marriott Bonvoy.
These factors collectively underpin analyst price targets between $45 and $50, implying confidence that MGM Resorts’ diversified operations, accelerated digital business, and global projects will contribute to a stock rebound from current valuations.
Analyst Chad Beynon reiterated an "outperform" rating and a $48 price target on MGM stock. He regards MGM's balance-sheet strength, supportive shareholders, and goal to be a global entertainment leader as key positives. Notably, Beynon believes that MGM has several factors that could contribute to a rebound, with the potential upside of MGM stock being about 33%.
However, the stock has slumped 16.16% over the past year, primarily due to softness on the Las Vegas Strip, as MGM is the largest operator there. Lethargy in Las Vegas operations for the second and third quarters was expected due to earlier warnings from MGM rival Caesars Entertainment. Renovation disruption at the MGM Grand on the Las Vegas Strip is a significant factor affecting MGM's earnings.
Despite these challenges, MGM's second-quarter results beat estimates, primarily due to strength in the BetMGM segment. MGM's business diversification, including 25% Regional, 11% Macau, and 6% Digital, provides a buffer against such disruptions.
In other international news, MGM is boosting investments in Brazil, while the UAE may take several years to approve another casino license for MGM. As of June 30, MGM had $2.1 billion remaining on previously authorized buyback plans, with the company repurchasing $217 million of its own shares in the second quarter.
In conclusion, while the stock has faced challenges, analyst Chad Beynon's analysis suggests that MGM Resorts has the potential for a rebound, driven by its diversified operations, digital growth, and international opportunities.
- MGM Resorts' stronghold in commercial gaming, particularly in Las Vegas, contributes significantly to its financial strength, with properties like Bellagio and Mandalay Bay demonstrating resilience.
- MGM's strategic investments in technology, as seen in the development of its digital platform BetMGM, are driving robust financial growth, with net revenues rising by approximately 35-36% year over year.
- The casino-and-gambling giant is expanding its business beyond domestic markets, with strategic investments in international locations such as Osaka and Dubai, believing these ventures offer long-term growth and revenue diversification.
- Despite facing challenges in Las Vegas, MGM continues to excel in business and finance, with a loyal customer base, a strong balance sheet, and ongoing share repurchases, reflecting financial discipline and strategic direction towards global leadership in the gaming industry.
