MGM Resorts (MGM) Misses Guidance for First Time in 9 Quarters, Sterne Agee CRT Remain Bullish

Sterne Agee CRT maintained a Buy rating on MGM Resorts International (NYSE: MGM) and lowered their price target to $27 (from $28) after MGM missed Las Vegas Rev/PAR guidance for the first time in 9 quarters. this lead to a 6% YoY decrease in Strip EBITDA. However, MGM plans on executing several cost saving measures in the near-term.

Analyst David Bain comments, "Property margins from its wholly-owned Strip properties was 25.2% versus our 26.9% forecast. We believe MGM has vetted nearly 200 cost saving measures and will look to execute on several of them in the near-term, potentially equating to nearly $50m in cost refinements by the end of CY15 (and we believe it has identified an additional $100m of costs to extract from CY16 to CY17). Our 2Q15 Strip margin forecast increases +80 bps to 26.0%from 1Q15 results."

The analyst added, "Management continues to indicate it is open to any ideas to create shareholder value, including a REIT for a portion of its portfolio. However, it clearly sees the current activist proposal as flawed and indicated it has continually reviewed the idea of a REIT for several years - the idea is not new to MGM’s BOD - though it is cognizant that the manner

For an analyst ratings summary and ratings history on MGM Resorts click here. For more ratings news on MGM Resorts click here.

Shares of MGM Resorts closed at $21.27 yesterday.

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