Boston, MA 01/29/2014 (wallstreetpr) – The stocks of MGM Resorts International (NYSE:MGM), a leading hospitality company which owns and operates various casino resorts, have climber higher after it was upgraded by Bank of America Corporation (NYSE:BAC) from “neutral” to “buy” with a price target of $33.50. The reason Bank of America has upgraded MGM;s stock is because MGM’s Las Vegas division is showing recovery and its China’s division Macau has shown growing profits.
MGM’s strength
The reason MGM Resorts International (NYSE:MGM) is being considered a “buy” by many analysts is because MGM’s revenue growth rate is the highest in the industry and MGM’s revenue is rising steadily over the years which has given a significant boost to its earnings per share. The stock prices of MGM’s stock have shown a growth over the years which coupled with the expansion plans made by MGM will show higher profit earnings over the coming period of time. MGM has got approval to build $295 million casino near Baltimore which shall open in 2016 and which is predicted to be MGM’s most profitable venture after Las Vegas casinos.
MGM’s growth plans
MGM Resorts International (NYSE:MGM)’s 15 wholly owned casino resorts in the U.S. and its operations of MGM Macau resort and casino in China have provided a good source of earnings to MGM. MGM has refinanced its debt to CityCenter last year thereby reducing its interest payment by nearly $80 million giving MGM a chance to capitalize its gains and to grow and develop independently. Furthermore, MGM has remodeled its MGM Grand and Bellagio rooms last year because of which these properties have started performing well now. MGM is planning to open its properties at New York and Monte Carlo and is therefore revamping and upgrading its facilities at both the properties. MGM is also planning to renovate and expand its Supreme lounge by the end of 2014 which shall result in higher revenues for MGM.
MGM’s trouble
MGM’s Macau in China has been downgraded by JP Morgan Chase from “buy” to “neutral” because JP Morgan believes that MGM’s China division is not performing well and its stock are not expected to rise in the near future. This downgrading has led to a fall of 6% in MGM China’s stock price giving a reason for its investors to worry. However, the MGM head office in the U.S. maintains that it is unaffected by such downfall as JP Morgan Chase has forgotten to take into consideration the fact that though MGM’s China casinos growth which had depended largely on VIP investors till now has been recently growing due to China’ middle classes rising interest in MGM China’s casinos. The heads at MGM have maintained that things at Macau China are facing a temporary glitch and they are pretty hopeful that shares and earnings at Macau China will rise within the coming few months.
Conclusion
MGM Resorts International (NYSE:MGM) is and always has been one of the leading brands in its industry and with all the MGM’s plans of renovation, expansion and up gradation, this is one stock which analysts and critics alike should watch out for because MGM Resorts International is here to stay, grow and to expand beyond boundaries.
