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MGM Resorts International MGM

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MGM Continues to See Recovery in Its U.S. and Macao Regions, With Sports Betting Leading the Way

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

While MGM’s domestic and Macao business continues to recover toward our expectations, we are more constructive on its BetMGM joint venture, which reported sports betting and iGaming first-quarter sales annualized at $652 million (4% of our 2021 no-moat MGM sales forecast, accounting for its 50% ownership), up 266% versus 2020. As a result, we plan to increase our $33 fair value estimate by around $3 per share. We believe investors are more than pricing in MGM’s demand recovery and sports/iGaming opportunity and that they should wait for a larger margin of safety.

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Company Profile

Business Description

MGM Resorts is the largest resort operator on the Las Vegas Strip with 35,000 guest rooms and suites, representing about one fourth of all units in the market. The company's Vegas properties include MGM Grand, Mandalay Bay, Mirage, Luxor, New York-New York, and a 50% ownership stake in CityCenter. The Strip constituted approximately 49% of total EBITDAR in the prepandemic year of 2019. We estimate MGM will open a resort in Japan in 2027. The company also operates the 56%-owned MGM Macau casinos with a new property that opened on the Cotai Strip in early 2018.

3600 Las Vegas Boulevard South
Las Vegas, NV, 89109
T +1 702 693-7120
Sector Consumer Cyclical
Industry Resorts & Casinos
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 42,000