Publish Date: May 27, 2026, 10:19h.
Updated on: May 27, 2026, 10:19h.
- MGM poised for growth on the Las Vegas Strip, according to analysts
- Encouraging room rate trends projected for Q2
- MGM shares considered undervalued
MGM Resorts International (NYSE: MGM) witnessed a significant stock increase on Wednesday following an analyst’s upgrade, praising the positive trends in second-quarter room rates on the Las Vegas Strip and suggesting that the area is on the verge of returning to growth.
In the early trading hours, shares of the casino giant rose by 8.7% after Truist Securities analyst Barry Jonas upgraded the stock from “hold” to “buy,” increasing his price target from $42 to $55. This new target suggests a potential upside of 43.2% based on the closing price from May 26. Jonas anticipates that the current quarter may lead to a normalization in MGM’s earnings before interest, taxes, depreciation, and amortization (EBITDA) and revenue per available room (RevPAR) metrics.
“The Strip has faced about two years of challenging growth dynamics, influenced by factors such as limited air capacity, perceived value issues, international visitor challenges, inflation, and broader economic uncertainties,” notes Jonas. “As we approach Q2 2026, we believe comparables have normalized and RevPAR trends could improve. Most importantly, EBITDA should see year-over-year growth while general investor expectations remain humble.”
Jonas acknowledges that the paramount risks to MGM’s optimistic outlook stem from economic uncertainties and potential geopolitical instability. Specifically, if the ongoing conflict in Iran persists, it may sustain high inflation rates and dampen consumer confidence, which could negatively affect visits to Las Vegas.
Promising Q2 Ahead for MGM
MGM remains the largest operator of casino hotels on the Strip, closely tied to metrics like RevPAR, room pricing, and convention business. After a challenging April, recent trends show improvement in Strip occupancy and rates, with expectations for continued growth into June.
A Truist survey indicates that weekend room rates on the Strip have surged by 16% this May, largely driven by MGM’s competitor, Caesars Entertainment (NASDAQ: CZR), who recently hosted the State Farm conference. The survey hints at potential softness in June due to weaker weekend performance but expects strong weekdays to balance it out. July may also serve as a pivotal month for MGM if early indicators hold true.
“Looking ahead, July room rate forecasts are promising with Strip rates +9%, MGM +9%, and CZR +3%. However, it’s essential to note that our July observations are preliminary and could see substantial fluctuations weekly,” says Jonas.
Room rates at upscale properties such as MGM’s Bellagio and Cosmopolitan are anticipated to rise throughout the second quarter, while mid-range and lower-tier Strip hotels faced declines last month, per the Truist survey. Rates for budget Strip casino hotels are expected to drop in June.
Attractive Valuation for MGM Stock
MGM shares carry additional potential catalysts, including what Jonas refers to as a “supportive valuation” and the possibility of Caesars being acquired. Analysts have expressed that the $32 per share offer made by Tilman Fertitta for Caesars suggests that MGM’s value is significantly higher than its current trading level.
“We believe any acquisition would be beneficial for MGM for several reasons. Firstly, applying a ~20% discount to these acquisition multiples would indicate a potential MGM stock price of $55-57, suggesting a 43-48% upside ($70-72 at the same multiple representing 82-87% upside),” Jonas elaborates.
While the uncertainty surrounding the possible acquisition of Caesars remains, it is evident that there is a compelling valuation argument for MGM. Jonas argues that the domestic casino segment is severely undervalued.
“Although we don’t base our stock evaluations solely on valuation, we note that MGM shares are trading at just 5x our projected EBITDAR for 2027, 3.5x projected EBITDA, and a 20% free cash flow yield. Excluding MGM China and conservatively assuming zero value for BetMGM, the domestic operations are available at merely ~3x EBITDA,” the analyst concludes.