MGM Resorts International MGM 0.83% could continue to benefit from positive growth trends in its two biggest markets. Argus analyst John Staszak has upgraded MGM from Hold to Buy based on solid Las Vegas numbers and a potential rebound in the Macau market headed into 2017.
According to Staszak, Argus expects new casino openings in Macau will drive steady, positive traffic and revenue growth throughout Q4 and 2017.
“While MGM has the smallest exposure to Macau of any of the gaming companies in our coverage group, we think that it could more than double EBITDA in the Macau market over the next several years,” Staszak explained.
After 26 consecutive months of year-over-year (Y/Y) gaming revenue declines, Macau reported 1.1 percent growth in August and 7.4 percent growth in September.
MGM is expecting a big boost in Macau from its scheduled Q1 2017 opening of the MGM Cotai resort.
At the same time, Argus expects a strong convention climate in Las Vegas in 2017 will support hotel and food prices.
Staszak believes the market isn’t fully pricing the potential improvements in Macau in coming quarters. Argus has upped its 2016 EPS estimate for MGM from $0.66 to $0.75. In addition, the firm has raised…
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