Truist Upgrades MGM to ‘Buy’ on Predicted Las Vegas Strip Recovery

• Analysts flag an imminent growth turnaround for MGM’s core market
• Favorable hotel booking trends provide a strong tailwind for the current quarter
• MGM stock trades at a compelling discount, signaling a prime entry point

Shares of MGM Resorts International (NYSE: MGM) surged to a 52-week high Wednesday following a positive upgrade from Truist Securities. Analysts cited resilient second-quarter room rates on the Las Vegas Strip as a clear sign that the macro casino hub is ready to return to growth.

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 acknowledged 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.

MGM Earns Another Bull Call

MGM is the largest operator of casino hotels on the Strip. As such, it’s tethered to factors such as RevPar (Revenue Per Available Room), 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.

“There’s no shortage of cheap gaming stocks, but MGM is one of the few where estimates are poised to move higher. MGM moves in the direction of Strip estimates, and our conviction is growing that they’re meetable, if not beatable, after bottoming this past February,” wrote the analyst.

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 2027 estimated EBITDAR, 3.5x our 2027 estimated 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.