Shares of global hospitality and entertainment firm MGM Resorts (MGM) slipped 1.8% in extended trading hours on Wednesday despite its outstanding Q2 2021 financial results. MGM runs resorts in New Jersey, Maryland, Detroit, Massachusetts, Mississippi and Las Vegas.
The company reported an adjusted loss of $0.13 per share, narrower than the Street’s estimate of a loss of $0.44 per share. The company had reported a loss of $1.52 in the year-ago quarter. Net revenues skyrocketed 683% year-over-year to $2.3 billion, beating analysts’ expectations of $2.09 billion. This increase was driven by robust domestic demand.
Net revenues of Las Vegas Strip Resorts jumped 566% year-over-year to $1 billion; Regional Operations net revenues climbed 859% to $856 million; and net revenues of MGM China surged 836% to $311 million. The increases were driven by higher travel and easing of capacity and operational restrictions. (See MGM stock chart on TipRanks)
The CEO and President of MGM Resorts, Bill Hornbuckle, said, “Our Las Vegas Strip and Regional Operations Adjusted Property EBITDAR margins reached all-time records and our Regional Operations also delivered an all-time quarterly record in Adjusted Property EBITDAR. Our U.S. sports betting and iGaming venture, BetMGM, continues to outperform as the number two operator nationwide.”
On July 29, Goldman Sachs analyst Stephen Grambling upgraded the stock’s rating from Sell to Hold and raised the price target from $38 to $43 (15.4% upside potential). The analyst said, “A faster than expected recovery for conventions in Las Vegas, cost cuts, and growth in sports betting online have all given MGM more potential to gain.”
Overall, the stock has a Moderate Buy consensus based on 3 Buys and 3 Holds. The average MGM Resorts price target of $49.50 implies 32.8% upside potential. Shares have gained nearly 123% over the past year.
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