MGM Stock Downgraded on Lingering Las Vegas Casino Issues

• Stock downgraded as analyst sees weak leisure demand trumping strong group calendar
• Analyst expects Strip EBITDAR to decline this year
• Says MGM needs to improve customer value proposition

Shares of MGM Resorts International (NYSE: MGM) faltered Tuesday after a sell-side analyst downgraded the stock on lingering Las Vegas Strip headwinds.

In a report to clients, Truist Securities analyst Barry Jonas cut his rating on the Cosmopolitan operator to “hold” from “buy” with a $38 price target. That implies upside of 11.7% from where the stock trades at this writing. Jonas mentions still tepid earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) trends as potential headwinds to the casino stock.

Looking to Q4, based on quarter-to-date trends and our room survey (see more below) we think trends will sequentially improve, but perhaps not enough. For Q4, we expect EBITDAR to fall -9% year-over-year to $698 million, which is -2% below of consensus,” observes the analyst. “We also think the tone for 2026 may not be enough to drive the stock higher.”

Jonas forecasts a 1% drop in 2026 Strip EBITDAR, though he acknowledges much of that outlook hinges on the health of the consumer. If leisure travelers return to the Strip in bulk in the coming months, that “could warrant a refresh of our investment thesis midyear,” he says.

MGM Needs to Refresh Value Proposition

Following a market-lagging performance in 2025, MGM stock is seen as offering some value to investors, but the value situation is starkly different for consumers, particularly those frequenting the operator’s mid-tier Strip venues.

“Investors are clearly questioning if MGM and the wider Las Vegas community can improve value perceptions around [the] city to improve the outlook for the low to mid-end properties,” adds Jonas. “We have no doubt Las Vegas will bounce back to healthy growth — as it always does — we’re just not sure when this will resonate with investors.”

MGM’s customer-facing value proposition is tethered to investor equivalent because some market observers see the operator and rival Caesars Entertainment (NASDAQ: CZR) as potential beneficiaries of improved sentiment among middle-income consumers, but those casino companies have to give those customers reasons to visit their venues.

MGM’s M&A Outlook

Amid renewed chatter that MGM could make moves to acquire the 50% of BetMGM it doesn’t own, Jonas notes that BetMGM “remains a bright spot,” and action by MGM to boost its stake in that business could prompt a review of the downgrade, depending on the price paid.

“We also could see potential mergers and acquisitions following the sale of Northfield Park,” concludes Jonas. “Media reports have noted MGM has been looking to sell its Springfield property for some time, but it’s unclear if the scale of that sale would move the needle on total company valuation much.”