MGM Resorts stock could be a candidate for near-term recovery
MGM Resorts International (NYSE: MGM ) stock is struggling. Shares of the casino operator have fallen 4.10% since the start of the year, lagging the S&P 500 by a wide margin. Things have gotten worse in recent days, as evidenced by a 7.45% drop over the past week.
Still, some analysts are bullish on the stock, arguing it could be a solid candidate for a near-term recovery. The assessment comes ahead of the carrier's first-quarter earnings report scheduled for Wednesday, May 1, after U.S. stock markets close. This could be a catalyst for the stock's death, as could its favorable technical setup.
Specifically, MGM trades one standard deviation away from its 126-day moving average. "There have been six similar signals over the past three years, with the stock closing higher 67% of the time, for an average monthly gain of 4.4%," Schaeffer Investment Research firmly states, according to data from Schaeffer Senior Quantitative Analyst Rocky White. "As things stand, a move like this would lift MGM Resorts' stock price to nearly $45 per share."
Simply put, when MGM exhibits similar technical characteristics to the current stock, the stock price typically rises. Additionally, as Schaeffer noted, MGM is oversold, suggesting the company may be ready for a recovery.
Analysts bullish on MGM Resorts stock
Although MGM shares have underperformed this year, the stock remains favored by sell-side analysts. In the latest coverage of the name today, Seaport Research analyst Vitaly Umansky rates MGM a Buy with a $56 price target.
His bullish view on gaming stocks is driven by strong expectations for Macau, where he expects gross gaming revenue (GGR) to grow at a compound annual growth rate (CAGR) of 18% from 2023 to 2025. Las Vegas-based MGM owns 56% of MGM China, which operates two integrated resorts in the Special Administrative Region (SAR). Bank of America analyst Sean Kelly is also bullish on MGM.
"In Macau, we expect MGM Resorts International and Wynn to see significant share price gains," Kelly noted.
MGM is Las Vegas' largest operator, and Kelly expects the company to report first-quarter results that are in line with expectations but better than rival Caesars Entertainment Inc. (NASDAQ: CZR), which The company believes analysts lacked forecasts.
Encouraging baccarat trends could lead to upside for MGM and Wynn Resorts (NASDAQ: WYNN ) first-quarter results, analysts say.
Other Catalysts for MGM Resorts Stock
On the more speculative side of the balance sheet, MGM has other catalysts, but whether they will materialize remains to be seen. This includes potential sales of casinos in backward areas of Massachusetts and Ohio. However, the operator has not publicly confirmed that it has the rights to operate these venues in the market.
From a fundamental perspective, MGM can inject more confidence into investors by continuing to buy back stock, reduce debt, and show that BetMGM is standing up to competitors like DraftKings and FanDuel.
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Source: www.casino.org
