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MGM Resorts International (NYSE: MGM) rose more than 4% Tuesday after Mizuho initiated coverage of the casino stock with a buy rating. Analyst Ben Chaiken said the positive view on MGM Resorts (MGM) is related to this confidence that stocks are fundamentally undervalued. He noted that MGM (MGM) US operations alone trade for around 4.7 times EBITDA without considering the sports betting sector. Mizuho thinks MGM (MGM) is expected to command a higher trading multiple due to growth opportunities with Marriott partnership, potential casino in upstate New York, tracking BetMGM to profitability, casino development in Japan and Dubai hotel . “We see a compelling FCF and share repurchase value creation path, whereby MGM could theoretically purchase $4-5 billion of shares over the next five years, putting MGM on a path to generating double-digit FCF returns “Chaiken advised.
MGM traded at a seven-week high earlier in the session at $46.58. The Seeking Alpha Quant Rating on MGM flashes Buy, with strong factor ratings for profitability, momentum and revisions in evidence.
What to watch: The Nevada Gaming Control Board is expected to release the February gaming winnings report for the state sometime this week. The report will include the impact of the Super Bowl being hosted in Las Vegas. Analysts believe MGM could post huge numbers on the Strip for the month, although the sports betting suspension rate is concerning due to some of the key Super Bowl results going in the public’s favor in an unbalanced book.