No-Moat MGM’s Digital Gaming Business, BetMGM, Continues to Win Sales Growth; Shares Attractive

No-moat MGM’s online sports betting and iGaming business, BetMGM, provided a positive sales and EBITDA update, lifting our confidence that it stands to be a long-term market share leader in the roughly $30 billion revenue market we see by 2030. We plan to adjust our BetMGM forecast higher after MGM reports full results in early February, which, all else equal, would lift our $48 fair value estimate by around a low-single-digit percentage. We view shares as attractive, especially given signs of ongoing travel and leisure demand in MGM’s core U.S. business (80% of prepandemic EBITDA), along with Macao (20%) demand now improving after the removal of COVID-19 restrictions Jan. 8.