MGM Resorts International remains optimistic in CBRE's view, despite a sluggish pace in Las Vegas.
Casino Upgrade: MGM Makes a Bold Move on Las Vegas Strip
Get ready for a fresh blast of excitement on the Las Vegas Strip! MGM Resorts International is sparing no expense in revamping their iconic MGM Grand property. Buck Wargo, our go-to analyst, has the scoop on this game-changer.
CBRE, a leading real estate and investment firm, recently visited MGM Grand and emerged bullish on the stock, citing improving regional properties, a solid performance in Macau, and a rosy outlook for Las Vegas.
Things are moving at lightning speed at the MGM Grand. A massive $300 million remodel that kicked off in January is now thanks to a swift pace setting it to finish ahead of schedule, with remodeled rooms and suites gracing guests by mid-October – two whole months earlier than anticipated!
MGM isn't resting on their laurels. They're upping the ante with new dining venues, attractions, and even a live-dealer studio on the casino floor for BetMGM customers. Brace yourself for the Netflix Bites eatery, meant to delight fans of popular Netflix shows, and the Palm Tree Beach Club set to open this summer.
The revamped rooms aren't just about the fancy design – they're set to reel in more money too. With premium rooms in high demand, especially as we approach the site of the planned A's stadium, this renovation is a significant boost for footfall.
CBRE has tweaked their Las Vegas EBITDAR estimates to account for this quicker reno project, along with summer seasonality. Around $65 million in EBITDAR will be affected, according to John DeCree, CBRE's equity research director. However, he remains optimistic about the long-term prospects of Las Vegas in 2026 given a packed schedule of events and MGM's thriving group bookings.
Such positive sentiments are a boon for MGM's valuation, which predominantly relies on the Strip's success. But with a diversified business portfolio, MGM stands ready to weather any Strip fluctuations.
On the regional front, MGM's segment is surpassing expectations, thanks to a 19.1% surge in gaming revenue at the Borgata in May. Macau's gaming revenue remains stable despite trade war concerns, and MGM's market share is robust. BetMGM raised its 2025 guidance after projecting at least $2.6 billion in revenue, with at least $100 million in EBITDA.
CBRE has laid out a $48 target price for MGM stock, based on a 6.5 times multiple of its 2026 EBITDA. With the stock trading in the low $30s, this presents a great chance for investors!
In light of the MGM Grand's extensive renovation, one might anticipate an influx of sports-related activities or venues to complement the upgraded property. The speedy completion of the $300 million remodel might pave the way for MGM to venture into the realm of sports entertainment.
