weather icon Mostly Cloudy

MGM tells investors to be prepared for major upswing

Gaming analysts are buying into MGM Resorts International’s guidance to investors that the company is heading into a major upswing.

In reports to investor clients, UBS Financial Services and J.P. Morgan reiterated favorable outlooks for MGM stock following last week’s first-ever Analyst and Investment Day presentations by the company.

MGM invited the investment community to Las Vegas on Thursday to hear more than four hours of presentations about the company and its plans from its executives. Following the presentation, Robin Farley of Switzerland-based UBS issued a report reiterating its “buy” rating for MGM, citing the company’s belief that it will achieve an annual adjusted cash-flow benefit of $400 million by the end of 2017, an increase from its previously announced target of $300 million. In so doing, the company also expects to re-establish an investment-grade credit rating.

Joseph Greff, an analyst with J.P. Morgan, New York, reiterated his overweight rating on MGM stock with a target price of $30 a share. “Overweight” stocks are those expected to outperform their sector, industry or the market as a whole.

An estimated 65 analysts attended the sessions and more than 400 were registered to listen to the presentation online at which executives spelled out its financial strategies and listed a parade of projects and property openings the company believes will boost its fortunes in the coming years.

Chief financial officer Dan D’Arrigo, in an interview Monday, said the goal of the event was to highlight the company’s financial achievements and explain how those achievements would affect the company’s future.

“Sometimes, Las Vegas gets painted with the same brush as other destinations in the United States, but given the critical mass we have here with our resorts and amenities we felt it would be important to simplify the story and put it together for everybody in the investment community,” D’Arrigo said.

In the opening session, MGM Chairman and CEO Jim Murren told analysts the company has “the best assets in the hospitality industry.”

“We have a deeper bench, we’re more diverse, more thoughtful, we have more ideas and we’re more innovative and creative than our competitors,” Murren said. “We are the employer of choice in Las Vegas.”

Murren said the company would continue to expand margins in Las Vegas and at other properties in other locations.

Murren said “the old playbook had to be thrown away” after the recession.

“That’s the reason why we are on a roll right now and we see a very bright future going forward,” Murren said.

Chief operating officer Corey Sanders said MGM is poised to outperform out-of-state competitors, explaining that Las Vegas visitation is in an upswing and there will be limited room supply growth in Southern Nevada over the next few years. The company estimated there were 1.5 rooms per visitor available in 2009 when the recession was at its peak. It now estimates that will fall to 1.23 rooms per visitor by 2019 as visitation climbs.

Sanders also said large-scale meeting and convention business is picking up for the company, which is expected to drive room rates higher with the demand.

D’Arrigo acknowledged that MGM’s recently enacted pay-for-parking strategy would figure positively toward the company’s bottom line, but revenue generated from it would represent a small percentage of the gains of other categories.

The company also has a parade of property openings in the months ahead, which is expected to drive new volume.

The development pipeline began in April with the opening of the T-Mobile Arena and Toshiba Plaza to drive entertainment business to the south Strip.

Next up is the $1.3 billion, 300-room MGM National Harbor in Maryland in December, which company officials expect to be the most profitable casino-hotel outside Las Vegas.

The $3 billion MGM Cotai in Macau is expected to open in the first part of 2017, doubling the company’s capacity in the former Portuguese colony in China.

The transformation of the Monte Carlo on the Strip to The Park MGM is planned by late 2018. The $450 million remake of the property will transform the upper floors of the property to NoMad Las Vegas through a partnership with the Sydell Corp.

The $865 million MGM Springfield in suburban Boston also is due in late 2018. The 250-room hotel will have a casino with 3,000 slot machines and 100 table games.

MGM stock on Monday closed down 1.3 percent, 33 cents a share, to $24.28 on average trading.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Find him on Twitter: @RickVelotta

Don't miss the big stories. Like us on Facebook.
Business Videos
How much do Las Vegas casino CEOs make?
Las Vegas gaming CEOs made anywhere between $1 million and $24 million last year, according to company filings with the U.S. Securities and Exchange Commission. ((Las Vegas Review-Journal)
30-year-old Rio needs a little TLC
Nearly 30 years after the Rio opened, the red and blue jewel that helped catapult Las Vegas to a new level with its buffet and nightclub has lost its status along with its shine.
The latest on the Drew Las Vegas - VIDEO
Eli Segall recounts his tour of the Drew Las Vegas, formerly the Fontainebleau, on the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
Pinball Hall of Fame to move near south Strip
Operators of the Pinball Hall of Fame have been approved to build a new, larger arcade near the south edge of the Strip on Las Vegas Boulevard near Russel Road. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
National Hardware Show underway Las Vegas
The National Hardware Show kicked off Tuesday at the Las Vegas Convention Center (Mat Luschek / Review-Journal)
Caesars for sale?
Caesars Entertainment Corp. has been swept up in takeover speculation since the company’s share price tumbled last year amid disappointing earnings and concerns over a recession. Amid the decline, hedge funds scooped up shares. Billionaire activist investor Carl Icahn began buying shares of Caesars as early as January. Icahn acquired nearly 18 percent by mid-March. In February Icahn called on the Caesars board to study a sale as a way to boost shareholder value.
Las Vegas home prices
Las Vegas home prices grew fastest among major markets in February for the ninth straight month. But amid affordability concerns, the growth rate has slowed down. Southern Nevada prices in February were up 9.7% from a year earlier, according to the latest S&P CoreLogic Case-Shiller index. The last time Las Vegas' price growth fell below 10% was in September 2017, S&P Dow Jones Indices reported.
Free Parking Coming To Wynn
Free parking will come to the Wynn and Encore resorts on May 1, 2019. (Mat Luschek / Review-Journal)
Founding Venetian employees talk about 20 years at the Strip resort
The Venetian, which opened May 3, 1999, is celebrating 20 years on the Las Vegas Strip. Seven original employees talk about opening the luxury resort and working there for two decades. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Circa aiming for December 2020 opening
The 1.25-million-square-foot property will have 44-stories and 777-rooms. It will also have a separate nine-story, 1,201-space parking garage.
Boxabl official explains the building concept
Boxabl business development manager Galiano Tiramani shows off a room built by his company. (Blake Apgar/Las Vegas Review-Journal)
TI/Mirage Tram reopens
The tram that shuttles guests between TI and Mirage reopened this week after being closed for much of 2018.
Las Vegas Convention Center expansion taking shape
Renderings and actual footage show how the Las Vegas Convention Center is evolving.
Former Starbucks CEO Howard Schultz at Las Vegas convention
Former Starbucks CEO and potential presidential candidate Howard Schultz spoke at the Epicor Insights user conference at Mandalay Bay Convention Center Wednesday, April 17, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Drew Las Vegas to open in the second quarter of 2022
The 67-story Drew Las Vegas is slated to open in the second quarter of 2022 at the north end of the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
NAB Day 1 (Time Lapse)
NAB kicked off at the Las Vegas Convention Center on Monday, April 8, 2019. (Mat Luschek / Review-Journal)
National Association of Broadcasters Show shows 1mm thick 8K TV with 22.2 channel digital sound
Japan’s NHK Science & Technology Research Laboratories booth featured a 1mm thick 8K TV system used in conjunction with a 22.2 channel digital sound system at the National Association of Broadcasters Show at the Las Vegas Convention Center. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Nevada shoppers react to Smith’s no longer accepting Visa credit cards
On March 1, Smith’s announced that it would no longer be accepting Visa credit cards at any of its 142 supermarkets, including the 45 in Nevada.
Massachusetts Gaming Commission asks how long Wynn executives knew about misconduct
Business reporter Rick Velotta gives an update on the adjudicatory hearing on the suitability of Wynn Resorts to retain its gaming license in Massachusetts.
Henderson app developer part of Startup in Residence
Henderson based developers of the app On Point Barricade are taking part in Startup in Residence, a North America program dedicated to pairing tech companies with governments. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Sam's Town employees and customers talk of their love for the iconic casino
Longtime Sam's Town employees and customers love each other and love their casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Las Vegas apartments rents
Las Vegas’ apartment market has accelerated in recent years. Developers are packing the suburbs with projects, landlords are on a buying spree, and tenants have filled buildings.
William Boyd talks about the birth of Sam's Town
On the eve of the 40th anniversary of Sam's Town, William Boyd, executive chairman of Boyd Gaming and son of hotel namesake Sam Boyd, talks about how the casino became one of the first local properties in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
High Roller observation wheel turns five
The world’s tallest observation wheel celebrates it’s fifth year on Sunday, March 31, 2019. (Michael Quine/Las Vegas Review-Journal) @Vegas88s
Escape Room Industry Growing In Las Vegas
Escapology employees discuss the growing escape room industry in the U.S. and Las Vegas. (Bailey Schulz/Las Vegas Review-Journal)
Impact of parking fees on visiting the Las Vegas Strip
There are no data showing a relationship between Strip resort and parking fees and the number of out-of-state visitors to Las Vegas. But there are data showing a relationship between Strip parking fees and the number of local visitors to the the Strip. ‘’As a local, I find myself picking hotels I visit for dinner or entertainment, based on whether they charge for parking or not,”’ said David Perisset, the owner of Exotics Racing. ‘’It is not a matter of money, more of principle.’’ A 2018 survey by the Las Vegas Global Economic Alliance found 36.9 percent of Clark County residents reported avoiding parking at Strip casinos that charge for parking. 29.1 percent reported avoiding using any services from a Strip casino that charges for parking.
MGM's sports betting deals
MGM Resorts International signed a sports betting sponsorship agreement with the NBA in July It was the first professional sports league to have official ties with a legal sports betting house. The deal came just two months after the U.S. Supreme Court overturned a law prohibiting sports betting in most states. In October, MGM became the first gaming company to sign a sports betting partnership with the NHL. In November, MGM became the first gaming company to sign a sports betting partnership with the MLB. Financial terms of Tuesday’s deal and earlier partnerships have not been announced.
Faraday puts Las Vegas land on the market
Nearly two years after Faraday Future bailed on its North Las Vegas auto factory, the company has put its land up for sale. (Michael Quine/Las Vegas Review-Journal)
El Cortez owner Kenny Epstein on running the iconic property
Kenny Epstein, owner of the El Cortez Hotel in downtown Las Vegas, talks about Jackie Gaughan mentorship and answers rumors about bodies in the basement at the mob-era casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
LVCVA recommends construction of underground people mover
The Las Vegas Convention and Visitors Authority announced the recommendation for an underground people mover for the convention center. The system would have the potential to expand and connect Downtown and the resort corridor all the way to McCarran. (Michael Quine/ Las Vegas Review-Journal)
Lucky Dragon’s foreign investors demand refund

The Lucky Dragon’s developers and prior management are facing lawsuits from Chinese investors, the project’s main lender and a Canadian high-roller who paid a $400,000 deposit to lease the casino just one month before it abruptly closed.