Zacks Investment Research downgraded shares of MGM Resorts International (MGG) from OUTPERFORM to NEUTRAL on November 20, 2014, with a target price of $23.00.
We revert to a Neutral recommendation on MGM Resorts from Outperform owing to its lower-than-expected third quarter results. MGM's third quarter loss of $0.02 compared unfavorably with the Zacks Consensus Estimate of earnings of $0.06 and the year-ago earnings of $0.02. The loss was due to a decline in casino revenues in the domestic market and lower number of VIP gamblers in Macau. Meanwhile, revenues of $2.49 billion just about managed to beat the consensus mark and grew only 1% year over year. The sluggish results reflect a slowdown in gambling in Macau, a major source of revenues for the company. China's crackdown on illegal money transfers, tighter restrictions on visas, protests in Hong Kong and the smoking ban in the casinos are concerns. However, we believe strong growth in the mass market is mitigating the effects of a slowdown in the VIP gaming business in Macau. Going forward, an increase in visitation in the Las Vegas market and improving trends at its urban complex, CityCenter should bode well for domestic growth.
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