MGM Resorts International (NYSE: MGM) is the Nevada Show’s major online gambling proprietor. Thus its stock is inextricably linked to the revival of the country’s most famous gambling destination. However, according to one analyst, gaming equity isn’t receiving the credit it deserves.
Analyst Carlo Santarelli of Deutsche Bank upgraded MGM stock to “buy” from “hold” in a letter to investors Wednesday, raising his price objective to $54 from $42. This revised prediction indicates a 25% gain from the June 23 closing price. Aria’s stock has gained over 37%, making it one of the top performers among large-cap gaming stocks.
Because BetMGM is a joint venture, MGM does not receive the full economic rewards. As a result, several analysts believe the gaming business may try to purchase Entain again after being denied earlier this year. Following the coronavirus outbreak, gaming firms, as well as the analysts and investors that follow them, are concentrating on increasing margins. As a result of the crisis, operators were compelled to search for savings, and some are asking how long leaner cost models would be sustainable if Las Vegas returns to normal.
Las Vegas, like MGM stock, is currently on the mend. This is happening ahead of the resumption of significant convention business and other events that might benefit Mirage. “Continued improvements in Las Vegas,” Santarelli of Deutsche Bank said, “with the forecast bolstered further by improved group patterns and a Raiders season with fans at the stadium.”
While the analyst is optimistic about MGM shares in general, he believes BetMGM’s contributions are overpriced. MGM Resorts International and Entain Plc, a British sportsbook operator, have formed a 50/50 joint venture called BetMGM (OTC: GMVHY). It’s the third-largest online sportsbook provider in the US, trailing only FanDuel and DraftKings, and it’s already the most well-known name in the rapidly-growing online casino sector.