Friday, February 14, 2025

J.P. Morgan Analyst Lowers MGM Resorts Projections for 2025

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J.P. Morgan, an American multinational finance company, has lowered its projections for MGM Resorts International. In an investor note published on October 15, analyst Joseph Greff attributed the trimmed cash-flow projections to a variety of setbacks.

The Analyst Expects the Company to Lose Market Share in Macau

Greff cited uneven performance for MGM Resorts, sharing shaky Q3 and FY 2025 forecasts. The expert reiterated an Overweight rating on MGM’s stock but decreased its price target by $6 to $51 per share. MGM Resorts, for context, is trading at $39.90 as of the time of this writing.

The share price has experienced significant fluctuations following a drastic drop in August.

Greff attributed his forecast to changes in the Q1 2025 sports calendar. At the same time, he expressed caution about MGM’s business in Macau, despite the company’s rebounding in the region. While MGM Resorts is having its best post-COVID results in the SAR yet, Greff believed that the company could lose market share.

Another factor that affected the analyst’s projections was MGM’s hotel business in Las Vegas and suboptimal hotel room rates. While the Mirage and the Tropicana are no more, meaning that MGM has to deal with less competition, the price rates were still somewhat soft, Greff argued.

The analyst noted that MGM’s new projects have not been taken into account in his projections.

What Are Greff’s Projections?

The J.P. Morgan analyst expects MGM’s Q3 cash flow from the Las Vegas Strip to stand at $754 million. Greff expects an additional $298 million from regional casinos and $231 million from the company’s operation in Macau. These projections were notably rosier than Wall Street’s predictions.

For the final quarter of the year, the analyst predicts $749 million in cash flow from Vegas, $275 million from regional casinos and $274 million from Macau. Conversely, Wall Street experts expect MGM’s Q4 results from the Strip to be much better.

In the meantime, Greff decreased most of his FY 2025 projections. According to his estimates, MGM Resorts’ Las Vegas Strip cash flow for the period will stand at $2.9 billion – a figure that’s 5% lower than his previous forecast. Additionally, he also projected a lower cash flow of $1 billion from Macau, representing a 13% decrease from his previous report.

Greff, however, seems somewhat optimistic about MGM Resort’s regional casinos in the United States. The analyst raised his expectations for the company’s cash flow from this segment by 3% to $1.1 billion.

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