While analysts who cover MGM Resorts International are reluctant to talk about the company’s financial prospects two months after the 1 October massacre, they’re collectively saying MGM stock would be a good addition to a portfolio.
Several Wall Street analysts declined to be interviewed. Others didn’t return calls. But the consensus of 12 analysts who follow MGM from Zacks Equity Research are bullish on the company with seven giving a “strong buy” recommendation, one listing “buy” and four calling to “hold,” while none considered it an underperformer or recommending investors sell shares.
MGM stock traded at just over $33 at mid-week, not far off its 52-week high of $34.65 a share.
The reason for the optimism: MGM has diversified geographically and is continuing to invest, showing success through its partnership in Macau, where it will open a new $3.1 billion resort on the Cotai Strip next month, and in Massachusetts, where a $950 million property in Springfield is due to open later in 2018.
The company’s National Harbor project in suburban Washington, D.C., that observed its one-year anniversary on Friday has been deemed a major success and last year’s $900 million buyout of the Borgata from Boyd Gaming gives the company full control of the market leader in Atlantic City.
MGM also dominates in the Biloxi, Mississippi, and Detroit markets. In March, the company announced a partnership to build on 26 acres on Dubai’s Jumeirah Beach.
MGM officials have declined interviews with the prospect of litigation involving the shooting on the horizon. At least 14 lawsuits have been filed against MGM and other defendants in Clark County and, in Los Angeles, a lawsuit has been filed on behalf of more than 450 victims.
Company executives verified a month after the shooting that they expected a small decline in business resulting from individual cancellations of hotel reservations. But they added that there had been no convention and trade show cancellations at their properties.
Monte Carlo transformation
The $450 million Monte Carlo transformation, in which the property will become Park MGM in 2018, was cited as a potentially bigger reason for a revenue decline than the shooting as hundreds of room nights were taken off line over time as the company partnered with the Sydell Group to renovate rooms and suites to NoMad-branded hotel specifications.
MGM is expected to provide new details about its WNBA team that will begin play at the Mandalay Bay Events Center next summer. Acquiring the San Antonio Stars and relocating the team to Las Vegas is widely regarded as a strategy to eventually house an NBA team.
A clearer picture of the financial impact MGM is taking as a result of the shooting is expected to come in mid-February when the company presents its fourth-quarter results.