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Buy MGM Stock before Casino Boom Returns


Jun. 4 2020, Updated 9:43 a.m. ET

Today at 7:47 AM ET, MGM Resorts International (NYSE:MGM) stock rose 5.7% to $21.43 in the pre-market session. The stock rose 11.3% on Wednesday and ended the day at $20.26 with a market cap of $10 billion. The company’s share price rose. Investors expect good news from the company today.

Today, MGM Resorts is set to re-open its Las Vegas casinos. The company temporarily closed its casinos amid the COVID-19 pandemic. According to a Reuters report, “Democratic Nevada Governor Steve Sisolak said on Tuesday he felt confident in the state’s tentative plan to re-open its gambling and hotel businesses on that date, and said guidelines could be released by the Nevada Gaming Commission as early as Wednesday.”

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MGM’s Q1 earnings results

In the first quarter, which ended in March, MGM reported an adjusted EPS of -$0.47 compared to $0.05 in the first quarter of 2019. The adjusted EPS missed analysts’ consensus estimate of -$0.35. MGM generated sales of $2.25 billion—a reduction of 29.1% from the first quarter of 2019. The company missed analysts’ consensus revenue estimate of $2.42 billion.

Wall Street analysts expect MGM to report an adjusted EPS of -$1.72 on revenues of $517.9 million in the second quarter. Analysts also expect the company’s sales to decline 49.3% YoY (year-over-year) in 2020 to $6.5 billion. The sales could rise by 59% YoY in 2021 to $10.4 billion. The adjusted EPS will decrease from $0.77 in 2019 to -$1.74 in 2020. Analysts also expect an adjusted EPS of -$0.92 in 2021.

Analysts’ recommendations for MGM stock

Among the 20 analysts following MGM stock, six recommend a “buy,” 13 recommend a “hold,” and one recommends a “sell.” Wall Street analysts’ mean target price on the stock is $18.04, which implies an 11% loss from the current level of $20.26. The consensus target price for the stock has decreased from $20.99 in May—a reduction of 14.1%.

Stock returns

MGM stock is trading 41.5% below its 52-week high of $34.64 and 243.4% above its 52-week low of $5.90. Based on the closing price on Wednesday, MGM stock was trading 27.3% above its 20-day moving average of $15.91. The stock is also trading 38.7% above its 50-day moving average of $14.61 and 1.3% below its 100-day moving average of $20.52. MGM’s 14-day relative strength index number is 69, which suggests that it’s overbought.

MGM stock has a middle Bollinger Band level of $15.91, while its lower Bollinger Band level is $12.13. On Wednesday, MGM stock closed near its upper Bollinger Band level of $19.70, which suggests that it’s overbought.

At 8:26 AM ET today, the S&P 500 futures fell 0.37%, while the Dow futures fell 0.19%. Read US Stock Markets: Will Nasdaq Hit All-Time Highs in June? to learn more.


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