Shares of MGM Resorts International (NYSE: MGM) are down over 10% today after Barry Diller’s People Inc. (NASDAQ: PPLI) withdrew its $48.30 per share takeover offer for the company, causing trading volume to surge to more than triple the daily average.
Barry Diller, the largest MGM shareholder, cited complexities leading to the withdrawal of the offer to take the company private. Meanwhile, MGM’s board is eager to continue leading MGM Resorts independently. Analysts now view MGM as an execution story.
Jefferies analyst David Katz believes MGM has a strong portfolio but must show disciplined capital usage, demonstrate improvements in Las Vegas, digital gaming progress, and the monetization of non-core assets to attract investors.
“Successful execution against these priorities should help narrow the gap between MGM’s public valuation and its underlying asset value,” mentioned Katz.
Analysts rate MGM shares as a “hold” with a $45 price target.
MGM Stock Undervalued
Despite the drop following the withdrawn takeover offer, analysts view the current price as a buying opportunity, considering MGM deeply undervalued.
Using a similar acquisition price of $31 per share for Caesars Entertainment, Texas Capital analyst David Bain estimates MGM’s value to exceed its current trading range.
“MGM’s intrinsic value offers significant upside potential for long-term investors. MGM’s value could soar to $53 per share,” noted Bain.
Bain also highlights additional value from MGM Osaka and the potential for aggressive share repurchases.
Analyzing MGM Catalysts
Without the People takeover as a catalyst, MGM could see a boost from other factors, such as signs of recovery on the Las Vegas Strip. Analysts also mention a potential sale of MGM Springfield and the unlocking of BetMGM value as positive developments for the company.
Both analysts agree that the opening of MGM Osaka in 2030 could further elevate MGM’s stock.