MGM Shares Jump After Upgrades, Las Vegas Demand Strengthens

MGM Resorts shares climbed 9.62% to $42.15 on Wednesday after upgrades from JPMorgan and Truist, putting the stock among the top S&P 500 gainers and on pace for its highest close since Oct. 29, 2024. The firms pointed to stronger demand on the Las Vegas Strip and an improving earnings outlook.

Truist raised its rating to Buy from Hold and increased its price target to $55 from $42. The bank’s Las Vegas consumer surveys identified the MGM Grand as the most selected hotel destination among respondents. Led by Barry Jonas, the Truist team wrote that the survey results raised confidence that guests are returning to MGM properties and highlighted a strong group and event calendar and easier summer year-over-year comparisons that could support near-term momentum. The analysts wrote, “Barring worsening geopolitical/macro noise, we see the potential for upside revisions to Street earnings estimates, which, combined with improving investor sentiment, should drive MGM valuation higher.”

JPMorgan moved its rating to Overweight from Neutral and raised its price target to $46 from $41. Analyst Daniel Politzer wrote that the bank believes MGM’s Las Vegas Strip EBITDAR estimates have likely bottomed and could begin to improve in coming months as growth strengthens against easier comparisons and U.S. leisure travel remains resilient. The JPMorgan team wrote, “There’s no shortage of cheap gaming stocks, but MGM is one of the few where estimates are poised to move higher.”

Both firms noted risks from inflation and rising fuel costs that could pressure discretionary spending on leisure travel. JPMorgan added that MGM’s value-oriented promotions and the fact that roughly half of Las Vegas Strip traffic comes from drive-in customers should help support demand despite those pressures.

JPMorgan also expressed growing confidence in the Strip’s long-term supply-and-demand outlook ahead of the planned opening of a new Hard Rock property in late 2027, saying concerns about cannibalization may be overstated and could stimulate broader market demand. The bank highlighted an implied free cash flow yield of about 14%, ongoing share repurchases, lower short interest and strategic assets tied to the Caesars transaction and an IAC ownership stake.

MGM operates a large portfolio of casinos and resorts on the Las Vegas Strip and has exposure to online gambling and sports betting. The stock is up roughly 14% year to date and about 31% over the past 12 months, but remains well below its record closing high of $99.75 from October 2007. According to FactSet data, analysts hold an average Overweight rating on MGM with a consensus price target near $45.26.