A ninth consecutive month in which tourism declined in Las Vegas, combined with a drop in Strip gaming revenue in September, appear to have some investors on edge. And although Wall Street analysts believe the worst may be over for the destination, they lowered stock price estimates anyway.
Strip gross gaming revenue of $687.8 million in September was down 5.5% year over year. September visitation declined 9% after a 7% decline in August, 12% drop in July, 11% in June, and 7% in May when warning signs started to flash. “Investors were well aware of the summer softness in Las Vegas, but it was still difficult to absorb, with hold-normalized adjusted EBITDAR down 12.5% year-over-year on a 6.7% decline in revenue,” said CBRE analyst John DeCree, referring to Caesars’s third-quarter earnings.
“Although it wasn’t surprising, given the 550-basis-point year-over-year decline in occupancy and 6.8% decline in average daily rates, the 80% negative flow through on lost revenue still shocked some investors.” As for MGM, DeCree pointed out that shares traded down about 6% after hours, as investors reacted to the headline miss.
Given Caesars’s results in Las Vegas, DeCree appreciated the lingering concerns about a consumer slowdown. Still, he views the summer softness on the Strip “as a confluence of idiosyncratic headwinds,” rather than a significant consumer or economic slowdown.
“The reduction in capacity from Spirit Airlines and the geopolitical tensions related to immigration from Canada significantly impacted visitation,” DeCree said. “Although some of these headwinds could persist, we’re hopeful that the worst is over. Management cited improving trends in Vegas throughout September and into October, due in large part to the strong group and convention calendar. We see strong convention trends over the next several quarters that should enable Las Vegas to regain its footing.”
After digesting MGM’s results, DeCree said July was the worst month of the quarter and trends improved sequentially, including into October, which could potentially be up over last year. He lowered MGM’s price target from $48 to $45.
“Looking ahead, F1 (in November) is shaping up to be better than last year, leisure activity has picked up, and group and convention demand is pacing up double-digits in the fourth quarter and beyond,” DeCree said. “While we remain cautious, there are enough improving demand indicators that give us comfort that the worst is over.”
Caesars traded at $18.64 at the close of the market on Thursday and is down $8.67 in the past month. DeCree called it “overly punitive” and sees it as a “compelling opportunity to buy a proven collection of desirable casino assets, including a high-growth digital gaming business.” He cautioned about a lack of a major catalyst in the near term and said the shares need to march higher on stability in Las Vegas and improving earnings over the next several quarters.
“With that in mind, we’re lowering our price to $33 from $40 on more conservative estimates,” DeCree said. ‘We still see plenty of long-term upside, but investors will need to regain confidence in Las Vegas after the rough summer.”
Deutsche Bank analyst Steven Pizzella talked about Caesars’s adjusted EBITDAR of $379 million compared to $423 million forecasted and consensus of $418 million. With July the worst month before improving in August and even more in September, Pizzella said management sees these trends further improving into the fourth quarter, driven by positive leisure and a strong group and convention calendar.
“With shares approximately 50% off the highs, Las Vegas headwinds reasonably well known, and a compelling valuation, we see a favorable setup for Caesars, as Las Vegas goes from bad to less bad.”
Deutsche Bank has a price target of $36, down from $50.
In talking about MGM in Las Vegas, Pizzella said the MGM Grand adjusted EBITDAR fell $25 million and of the remaining $78 million, about half was from Luxor and Excalibur, with the remaining decrease from lower average daily rates and occupancy.
Management sees signs of stabilization in Las Vegas with the luxury market continuing to show strength, groups and conventions returning, and MGM Grand guest rooms upgraded and back online. In addition, F1 pre-sales are up year over year and group business is currently pacing up low double digits for 2026.
“In the short term, we expect shares to be volatile and trade lower, given the miss in Las Vegas, which we believe predominately controls the sentiment for MGM,” Pizzella said. “Second, there’s a pattern of negative Las Vegas earnings revisions that we believe has to be reversed, before investors will buy the bad to less bad Las Vegas story and increasingly bearish sentiment from investors on the consumer overall.”
Pizzella lowered his MGM price target from $53 to $44.
Daniel Politzer with J.P. Morgan suggested the fourth quarter and 2026 should improve over the third quarter, but “Concern is warranted on leisure demand. Similarly, we expect investors to keep questioning if Strip estimates are now low enough.”
While Strip trends improved throughout the third quarter and into the fourth, Politizer said softer leisure trends have continued and “the macro outlook remains uncertain.”
Politzer lowered his price estimate for Caesars to $38, down from $43, while MGM fell from $41 to $38.
Barry Jonas with Truist Securities moved his MGM price target down to $47 from $48. It closed at $30.72 on Thursday and is down $5.10 in the past month.
Jonas lowered MGM’s 2026 EBITDAR 2%, mostly on lower Las Vegas estimates. MGM’s regionalization helps offset that, he said.
“Management noted that nearly half of the operational impact can be attributed to midweek weakness at the Luxor and Excalibur properties, suggesting continued softness at the low end,” Jonas said. Net revenues did grow across MGM’s luxury properties during midweek/weekends while down across non-luxury properties most significantly during weekdays.”
