Date of Posting: January 13, 2026, 11:13h.
Last updated on: January 13, 2026, 11:13h.
- Stock rating downgraded as analyst cites ongoing lack of leisure demand outpacing strong group schedule.
- Analyst predicts Strip EBITDAR will decrease this year.
- Advises MGM to enhance customer value offerings.
MGM Resorts International (NYSE: MGM) experienced a decline in shares Tuesday after a market analyst lowered the stock rating due to continuing challenges on the Las Vegas Strip.
In a client report, Truist Securities’ analyst Barry Jonas revised his rating on the Cosmopolitan operator to “hold” from “buy,” setting a price target of $38. This suggests an upside potential of 11.7% from the current trading level. Jonas highlights ongoing subpar earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) trends as potential challenges for the casino stock.
As we approach Q4, based on current trends and our room survey (details below), we anticipate some improvement, but not enough. For Q4, our expectation is a 9% decline year-over-year in EBITDAR to $698 million, which is 2% lower than consensus projections,” the analyst notes. “Additionally, we believe the outlook for 2026 may not be optimistic enough to elevate the stock’s value.”
The analyst anticipates a 1% decrease in Strip EBITDAR for 2026, acknowledging that a significant portion of this forecast depends on consumer conditions. If leisure travelers flock back to the Strip in the upcoming months, that “could prompt a reassessment of our investment perspective midyear,” adds Jonas.
Enhancing MGM’s Value Proposition
After a subpar performance in 2025, MGM stock is perceived as presenting some value to investors; however, customers seeking mid-tier offerings on the Strip have a markedly different experience.
Similar to other Strip operators, MGM has faced criticism for excessive pricing. Instances of $26 in-room bottled water and pancakes costing over $100 have surfaced, exacerbating public perception as social media amplifies these concerns. Management seems aware that enhancing value at their mid-range Las Vegas venues is imperative.
“Investors are evidently questioning whether MGM and the broader Las Vegas market can improve customers’ perceptions of value to enhance the outlook for lower to mid-tier properties,” Jonas explains. “We firmly believe Las Vegas will rebound to robust growth—historically, it always has—but it’s uncertain when this will become evident to investors.”
The value proposition faced by MGM is closely linked to their investor perspective, as some analysts regard MGM and its competitor Caesars Entertainment (NASDAQ: CZR) as likely beneficiaries of a favorable shift in sentiment among middle-income tourists. However, these casino operators must provide compelling reasons to draw visitors to their establishments.
MGM’s Future M&A Plans
Amid discussions about MGM potentially acquiring the 50% stake of BetMGM it does not yet own, Jonas points out that BetMGM “remains a promising aspect,” and MGM’s efforts to increase its stake in that operation could lead to a reevaluation of the downgrade, based on the acquisition cost.
With funds from the recent sale of a regional casino in Ohio, MGM may explore other acquisition prospects or consider divesting the operational rights of its casino in Springfield, Massachusetts as well.
“We could also expect potential mergers and acquisitions following the Northfield Park sale,” Jonas concludes. “Reports indicate that MGM has been contemplating selling its Springfield property for some time, though it remains uncertain if the scale of such a sale would significantly impact the company’s overall valuation.”