Wall Street Bets is a roundup of recent notes from analysts covering the gambling industry.
MGM Resorts’s third-quarter earnings call Wednesday was newsworthy, with CEO Bill Hornbuckle stating that an agreement with the Culinary Workers Union was imminent. (It was announced early this morning.)
The call also yielded positive financial results – revenue of $4 billion, a 16% increase over the third quarter of 2022, with net income of $161 million and adjusted EBITDR of $1.1 billion – that were met with enthusiasm by analysts, notably in the way MGM rebounded from a cyberattack in September.
Jefferies equity analyst David Katz wrote, “The upside to expectations in the quarter, coupled with the positive commentary, should be positive for the shares. Notably, the improved positioning in Macau and the rapid recovery post the cyberattack suggest fundamental strength. We maintain our view that the catalyst path in Las Vegas and growth avenues with BetMGM, global digital, Japan and prospectively New York, suggest upside. Reiterate Buy.”
Analyst Joseph Greff of J.P. Morgan wrote, “Though we note the quarter was noisy given the cyber impact … Strip commentary was positive for both Q4 (expected union renewal today, robust F1) and beyond (Super Bowl, Marriott deal), while a resilient customer continues to drive Regionals and Digital (JV and wholly-owned) ramps. Importantly, MGM continues to buy back shares (13 million for $572 million in the quarter), while the board authorized another $2 billion plan. We make no major changes to forward estimates and maintain both our $55 PT and Buy rating.”
“MGM’s 3Q23 property level EBITDAR of $1.27 billion exceeded our estimate by 6% or $74 million,” wrote analyst Barry Jonas of Truist Securities, “almost making up the $100 million impact related to the cybersecurity issue from September. … We estimate that above average table hold contributed about a third of the upside. MGM’s Las Vegas Strip and regional casinos each generated upside as did its unconsolidated affiliates (which includes BetMGM), which, in the aggregate, more than offset a slight shortfall in Macau. Overall, a healthy quarter.”
