A Wall Street analyst has put out a buy rating for MGM Resorts International stock after reviewing trends for Macau and Las Vegas and said he expects “strong” second quarter results.

David Katz with Jefferies Equities Research believes second-quarter results for Macau, as well as ongoing trends, “have been better than our forecast” after the first-quarter earnings results.

“An increase is warranted,” Katz wrote. “Generally speaking, we believe the second-quarter results should be positive for MGM shares, with strong trends in Las Vegas as well as in Macau, which incrementally supports our buy rating.”

MGM shares closed at $43 on Thursday. Jefferies’ price target is $64.

As for Jefferies’ investment rationale, Katz said the Las Vegas market recovery from groups and events has gone “under-noticed.” In addition, MGM has a strong capital position, BetMGM remains among the top five digital wagering platforms, and long-term growth in Asia and New York remain potential catalysts.

Katz said Jefferies has adjusted its model after a review and compared it to recent trends and discussions with MGM management based on revenue and EBITDAR in Macau.

“In short, we had previously reflected the strength in the Las Vegas market and MGM’s non-Vegas domestic properties, although Macau warranted higher estimates for the quarter,” Katz said.

Jefferies expects the MGM Macau segment to generate second-quarter revenue and adjusted EBITDAR of $606.9 million and $178.5 million, respectively, versus $531 million and $147.3 million previously.

For the fiscal year 2023, Jefferies’s MGM estimates call for $14.6 billion of revenue and $4.5 billion of adjusted EBITDAR, versus $14.4 billion and $4.4 billion previously.

As MGM’s approaches its second-quarter results, which “should be strong,” Jefferies is also focused on the digital progress of BetMGM and its other assets.

“With respect to BetMGM, the deceleration in market share trends is well understood by the Street, while intended product advancement remains a point of discussion,” Katz said. “The product landscape continues to evolve, notably among existing operators and potential new entrants, and the positioning of the BetMGM joint venture with Entain remains a critical value driver for MGM shares. Finally, we expect updated discussion around LeoVegas and its acquisition of Push Gaming.”

Katz contends that “valuation remains the key argument for MGM shares, based on its fundamental positioning in the strength of Las Vegas, long-term recovery in Macau, positive outcomes from BetMGM, and longer term Japan development.”

MGM’s balance sheet also supports the stock, since management has repurchased $2.26 billion worth of shares over the trailing 12 months, Katz said.