MGM Resorts International stock gained Monday after some Chinese cities announced an easing of pandemic restrictions and one analyst pointed to a catalyst within the Las Vegas business.
Truist’s Barry Jonas upgraded his rating on the casino stock (ticker: MGM) to Buy from Hold after nearly two years. He believes the number and quality of events planned for Las Vegas in the quarters ahead should drive the stock’s relative outperformance. Jonas pointed to several scheduled conferences that can bring in high-profile customers, who spend more per day than leisure visitors.
The stock gained more than 3% in premarket trading after Jonas’s note. News of cities including Shanghai and Hangzhou easing Covid-19 testing requirements propped up casino stocks overall. MGM owns 56% of
Jonas pointed to about 10 events that could bolster income—including the construction trade show CONEXPO-CON/AGG planned for mid-March, which is expected to bring in 129,000 guests. Its held every three years and should generate solid revenue per available room at MGM’s mid-lower-tier properties next year, he said.
the highly notable annual tech conference was greatly affected by the Omicron variant of Covid-19 last year, with only 40,000 visitors. The coming convention held in January is expected to have upward of 170,000 visitors, Jonas added.
The city is also on the Formula One calendar, which should boost revenue. One race in the car competition is scheduled to take place in Las Vegas in each of the next three years. Jones said this year’s F1 race in Miami increased average daily revenue per room by more than four times.
“We estimate these three large events alone could drive roughly $70 million of year-over-year [earnings before interest, taxes, depreciation, and amortization] upside in 2023,” the analyst said.
To be sure, Jonas does see potential for both
and the value implicit in the parent’s equity to grow rapidly when the region completely relaxes its Covid-19 restrictions but he’s on the pessimistic end.
“Timing Macau recovery is anyone’s guess,” he said.
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