Overview of the Downgrade#
Jefferies has downgraded MGM Resorts International from a Buy rating to Hold. This change comes with a revised price target of $44, down from $50. Analysts expressed concerns regarding MGM's capital structure and a limited growth outlook in the near term.
Impact of Recent Sales#
The downgrade follows the sale of MGM’s Northfield Park property, which led Jefferies to pause its coverage earlier. Analyst David Katz has now resumed coverage but with a more cautious view. He pointed out that MGM’s fully leased U.S. asset portfolio could hinder growth, as companies with similar structures face challenges in reinvesting due to fixed rental obligations.
Financial Performance#
In the first quarter of 2026, MGM reported revenues of $4.45 billion and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDAR) of $1.14 billion. These figures were slightly above Wall Street estimates for revenue but below expectations for EBITDAR. Katz described these results as broadly neutral, noting that a rise in self-insurance expenses and a decline in business interruption proceeds negatively impacted earnings.
Future Growth Prospects#
Jefferies highlighted concerns about declining leisure demand in Las Vegas and increasing competition in Macau, which could affect MGM’s core customer base. While Japan is seen as a potential growth area for MGM, it is expected to take about four years to materialize. Katz believes that MGM could see a positive shift in its stock if it successfully invests in opportunities that yield a mid-teens return on investment. However, he currently sees more immediate growth potential in other gaming operators.