MGM Resorts cyberattack

The Sept. 11 cyberattack on MGM Resorts had a ripple effect throughout the gaming industry, with Caesars Entertainment admitting it had been attacked a few days prior to the incident. In a Sept. 19 note, Jefferies equity analyst David Katz wrote that “investors have questioned the timing and prospective impacts of both. … Earlier this week, MGM announced that they were victims of a cyber security attack that continues to affect multiple business components. In response, MGM notified law enforcement and has employed services from external cybersecurity experts as they attempt to curtail this ongoing issue. MGM continues to suffer from this issue; we expect a near-term impact of ~10%-20% for the days that the current conditions exist. Additionally, on 9/14, Caesars issued a statement confirming its business was also impacted but announced it paid a ~$15M ransom to prevent further disruptions. We expect MGM to restore normal service in time, although whether there is ongoing impact to business remains.”

Wynn in the U.A.E.

J.P. Morgan analyst Joseph Greff, in a Sept. 15 note, commented on Wynn’s interest in the United Arab Emirates and the “full-scale luxury integrated resort located on Al Marjan Island in Ras Al Khaimah, in which it will hold a 40% equity interest as well as receive fees in the form of a management and license fee contract.

“Recall that this project was first announced in January 2022 to little investor fanfare (which made sense at that time, in our view, since it was early in the regulatory process). We, and we think most other sell-side analysts, have adopted a wait and see approach — given this earlier skepticism on gaming in the region — and Street price targets have embedded zero equity value related to Wynn RAK.  We think progress is being made with respect to gaming law enactment, a gaming license being issued, property level financing being secured, and partner equity contributions and construction accelerates. As such, we think investors will start to assess and ascribe the net equity value here.”

International Game Technology

Truist Securities analyst Barry Jonas Sept. 15 commented on a recent virtual meeting with International Game Technology management. “While management did not have specific updates to provide on the strategic review, they noted they are running multiple processes concurrently,” Jonas wrote. “Management reiterated that the genesis of the strategic alternatives review was driven by the lack of market appreciation for the current structure of the portfolio, following recent structural margin improvements across segments. Additionally, as management sees few significant incremental synergies between the lottery and gaming/digital segments (though more between gaming and digital), they believe the businesses could potentially rerate higher if separated.”