Analysts at JP Morgan were blasé about MGM Resorts International‘s 3Q20 report, setting their price target at $22/share. Wrote Joseph Greff, “We remain Neutral rated as we continue to see a slow recovery on the LV Strip, a market that is dependent on both airlift (still down significantly y/y) as well as convention and group-related travel, which will likely be weak for the next several quarters and whose recovery is dependent—like everything else in our coverage universe—on COVID-19 therapeutics.” That’s no small problem, as MGM relies on the Las Vegas Strip for 55% of its cash flow. As Greff elaborated, “the pandemic has had an outsized impact on its fundamentals, particularly on 2020 and 1H21 conventions and tradeshows that have recently been cancelled and/or delayed, resulting in upper-30% mid-week occupancies.” That’s a lot of empty rooms and goes toward supporting our too-much/too-soon hypothesis.
Speaking of coffee, we need a list of casinos that supply Keurig coffee makers in rooms!
[…] and Georges always has an interesting look at earnings. Here’s their take on MGM and […]