Wall Street Bets: Analysts take on MGM Resorts, 3rd quarter outlook, G2E

October 23, 2023 3:22 PM
Photo: CDC Gaming Reports
  • Rege Behe, CDC Gaming Reports
October 23, 2023 3:22 PM
  • Rege Behe, CDC Gaming Reports

Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.

MGM Resorts analysis

J.P. Morgan analyst Joseph Greff stated in an Oct. 20 note that MGM Resorts shares are down almost 30% since its 2023 second quarter earnings report was released in early August.

Story continues below

“Investor sentiment towards MGM (and, frankly, most of gaming, both U.S. and Macau-centric) is extremely negative,” Greff wrote, “and we see MGM shares offering contrarian investors tremendous value, with its current share price implying an 18% free cash flow yield for its U.S. land-based casinos (i.e., excluding Macau, BetMGM, Digital, and excess cash balance). We think aside from the impact from a one-time cyber-attack impact, the business, particularly in Las Vegas, is on solid footing and the stock more than reflects and prices in risks from a slowing U.S. consumer, labor disruption, and China macro/geopolitical concerns.”

Gaming industry outlook after third quarter

Analyst Barry Jonas or Truist Securities Oct. 18 wrote that three quarters into the year, “macro noise is loud and equity markets have sagged as of late — though gaming fundamentals remain resilient.

“Regional land-based revenues are largely flattish year-over-year on tough comps while the (Las Vegas) Strip continues to shine. Interactive GGR remains in growth mode with tailwinds for both online sports betting and igaming as profits are visible now (or without glasses). While we’ve been looking for real consumer stress to no avail for 2 plus years, the question now is whether it finally starts to show (e.g. record-high interest rates, student loan repayments, potential further gas price hikes, etc.).”

G2E

Reflecting on the recent Global Gaming Expo in Las Vegas, Jefferies equity analyst David Katz Oct. 22 wrote that the event “provided key perspectives that set up the remainder of the year.

“One of the biggest focus points post G2E is the competitive dynamic between Light & Wonder and Aristocrat moving forward as both should continue to grow market share in North America, given product development efforts and talent acquisition strategies on behalf of both companies. Potential acquisition/spinoff of IGT remain a debated topic, though the company has yet to comment. AGS continues to experience positive product strength, and Everi claims their recent investment in their products should help ramp up their momentum.”