UBS Reiterates Buy on MGM Resorts (MGM) Following Analyst Day
UBS maintained a Buy rating and $29.00 price target on MGM Resorts (NYSE: MGM) following the company's analyst day. The company raised its near-term target for Profit Growth Plan to $400M, up from $300M by the end of 2017. Management also now expects Vegas margins to be in the low 30%s, up from 30% previously.
Analyst Robin Farley commented, "While it might be tough to assign value to 4-year RevPAR and gaming revenue targets (especially when Q2 RevPAR may be coming in a little light of guidance) MGM did raise its near-term target for its Profit Growth Plan (PGP) to $400M, up from $300M by end of '17. MGM now expects Vegas '17E margins in low 30%s, up from 30% prev, above our 29% est. MGM targeting $3.1B of consolidated EBITDA by 2017E (above UBSe of $2.7B and Street's $2.7B) and $4B by '19E, implying +15% adj EBITDA CAGR from 1) +10% net rev CAGR from '15-'19, driven by +3% RevPAR and +2% gaming rev; 2) $400M of PGP; and 3) Q3'16 Borgata transaction closing, MGM Harbor Q4'16 opening, MGM Cotai Q1'17 opening and Springfield MA '18 opening. MGM reiterated FY'16 RevPAR guide +6%, but sounds like Q2 RevPAR a little short of +5% guide."
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Shares of MGM Resorts closed at $24.61 yesterday.