Truist Upgrades MGM, Says LV Strip Close to Returning to Growth
Posted on: May 27, 2026, 10:19h.
Last updated on: May 27, 2026, 10:19h.
- Analyst says MGM could be nearing positive Las Vegas Strip inflection
- Q2 room rate trends look encouraging
- MGM stock appears undervalued
Shares of MGM Resorts International (NYSE: MGM) surged Wednesday after an analyst upgraded the stock, citing favorable second-quarter room rate trends on the Las Vegas Strip and the possibility that the US casino hub is close to recapturing positive growth trends.
In early trading, shares of the Cosmopolitan operator were higher by 8.7% after Truist Securities analyst Barry Jonas upgraded the stock to “buy” from “hold” while lifting his price target to $55 from $42. The revised price target implies upside of 43.2% from the May 26 close. Jonas sees the possibility of the current quarter bringing normalization to MGM earnings before interest, taxes, depreciation and amortization (EBITDA) and revenue per available room (RevPAR) trends.
The Strip has seen about two years of challenging growth dynamics, attributable to a host of items incl. reduced air capacity, value perceptions, international visitation issues, inflation and general macro weakness,” observes Jonas. “As we approach Q2 2026, we think comps have eased and RevPAR trends can improve. More importantly, EBITDA can return to Y/Y growth while overall investor expectations remain modest.”
The analyst acknowledges that the biggest threats to the MGM bull thesis are macroeconomic uncertainty and geopolitical volatility. Said another way, if the war in Iran lingers even longer than expected, that could keep inflation high and consumer confidence low, potentially weighing on consumers’ appetite to visit Las Vegas.
Q2 Could Shape Up Nicely for MGM
MGM is the largest operator of casino hotels on the Strip. As such, it’s tethered to factors such as RevPar, room rates and convention/meeting business. Following a rough April, Strip occupancy and room rates are trending in the right direction this month and more of the same is expected in June.
A Truist survey notes May weekend rates on the Strip are up 16% this year with a significant portion of those gains attributable to MGM rival Caesars Entertainment (NASDAQ: CZR) recently hosting the State Farm conference. The survey says some softness is to be expected in June due to weekend lethargy, but that will be somewhat augmented by solid weekdays. The third quarter could also start be a catalyst for MGM if July trends are accurate indicators.
“Looking ahead July rate trends are encouraging with Strip rates +9%, MGM +9% and CZR +3%. We caution that it’s still early in our July read and could see meaningful changes week-over-week,” adds Jonas.
Room rates at high-end properties, such as MGM’s Bellagio and Cosmopolitan, are expected to notch growth across all three months of the second quarter while mid- and lower-tier Strip venues experienced contraction last month, according to the Truist survey. Room rates at low-end Strip casino hotels are expected to decline in June.
MGM Stock Appealing on Valuation
MGM stock has some other potential catalysts, including what Jonas characterizes as a “supportive valuation” and the possibility of Caesars being acquired. Analysts have lamented that the $32 a share Tilman Fertitta is reportedly offering for Caesars implies MGM is worth significantly more than where the stock trades today.
“We think any transaction here would be positive for MGM for a few reasons. First applying a ~20% haircut to these takeout multiples would imply a potential $55-57 MGM stock price for 43-48% upside ($70-72 at the same multiple for 82-87% upside),” says Jonas.
Whether or not Caesars is acquired remains to be seen, but it’s clear there’s a valuation argument to be made in favor of MGM. Jones says the operator’s domestic casino business is deeply discounted.
“While we don’t base any stock thesis/ratings changes on valuation alone, we note MGM’s shares trade at just 5x our 2027E EBITDAR, 3.5x our 2027E EBITDA and a 20% FCF yield. If we back out MGM China, and conservatively/punitively assume zero for BetMGM, then the domestic business is trading at just ~3x EBITDA,” concludes the analyst.
No comments yet