In a recent investor note dated October 15, J.P. Morgan has revised its forecasts for MGM Resorts International, reflecting a more cautious outlook on the company’s financial performance. Analyst Joseph Greff attributed this downshift in projections to a confluence of factors that have raised concerns about the casino and hospitality giant’s ability to maintain its competitive edge, particularly in Macau.

Changing Landscape in Macau

Greff’s analysis highlights the uneven performance of MGM Resorts, underscoring shaky third-quarter results and disappointing fiscal year 2025 forecasts. While maintaining an Overweight rating on MGM’s stock, he has reduced the price target by $6 to $51 per share, down from earlier estimates. This reduction comes as the stock trades around $39.90, indicating significant volatility following a steep decline in August.

One of the critical concerns raised by Greff is the potential for MGM to lose market share in Macau, even as the region shows signs of recovery post-COVID. Despite reported improvements, including the best post-pandemic results in the Special Administrative Region (SAR), Greff believes the competitive landscape is shifting, potentially impacting MGM’s positioning in the lucrative gaming market.

Las Vegas Hotel Operations Under Pressure

Aside from the challenges in Macau, J.P. Morgan’s analysis pointed to weaknesses in MGM’s hotel operations in Las Vegas. The absence of competition from properties like the Mirage and Tropicana should theoretically boost profitability; however, Greff outlined that the prevailing hotel room rates remain soft. This situation indicates a struggle for the company to capitalize on reduced competition, placing further strain on revenue expectations.

It is worth noting that Greff excluded any contributions from new projects MGM has in development when formulating his projections, suggesting that the current analysis might not fully capture the company’s long-term growth potential.

Q3 and Q4 Cash Flow Projections

Greff’s updated short-term forecasts present a mixed picture. He anticipates MGM’s cash flow from the Las Vegas Strip for the third quarter to reach approximately $754 million. Additionally, he expects $298 million from regional casinos and $231 million from operations in Macau. Notably, these figures are more optimistic than broader Wall Street predictions, hinting at a belief that MGM could outperform specific market expectations.

For the final quarter of 2023, Greff predicts a cash flow drop to $749 million from Las Vegas, with $275 million expected from regional operations, and $274 million from Macau. In contrast, Wall Street experts are anticipating a more favorable outcome for MGM’s Q4 revenue from the Las Vegas Strip.

Adjusted Fiscal Year 2025 Expectations

Looking further ahead, Greff has made significant downward adjustments to his FY 2025 estimates. He now projects MGM Resorts’ cash flow from the Las Vegas Strip to be around $2.9 billion, marking a 5% decrease from earlier expectations. Additionally, the analyst estimates $1 billion in cash flow from Macau, a notable decline of 13% from his previous forecast.

Despite these concerns regarding the Strip and Macau, there remains a silver lining for MGM. Greff has increased his optimistic outlook for the company’s regional casinos in the United States. His revised expectation for cash flow from this area is now set at $1.1 billion, representing a 3% increase. This suggests that while MGM faces hurdles in its marquee markets, it may still find strength in its diversified operations.

Conclusion

J.P. Morgan’s revisions to MGM Resorts International’s projections illuminate the volatility and evolving landscape within the gaming and hospitality sectors. While there are challenges ahead—especially in key regions like Macau and Las Vegas—there are also opportunities that could bolster MGM’s performance. The cautious optimism reflected in Joseph Greff’s notes highlights the complex nature of the current market, where adaptability and strategic developments will be crucial for sustaining growth in the coming years. As the industry continues to navigate recovery from the pandemic, stakeholders will keenly watch MGM’s response to these challenges, as well as its potential to capitalize on emerging opportunities in the entertainment landscape.

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The unveiling of Bally’s Corp. as the operator of Chicago’s premier casino has been a highly anticipated event, one that has drawn both optimism and critique. In its first year of operation, Bally’s has made measurable strides, but not without challenges. This article takes a comprehensive look at Bally’s journey so far, analyzing its revenue performance, future plans, and its role in Chicago’s vibrant gambling landscape.

A Year of Performance: The Good and the Shortcomings

Bally’s temporary gaming site located at the historic Medinah Temple has thus far generated $124.6 million in revenue during its inaugural year. While this amount is significant, it falls short of the city’s ambitious annual revenue goal of $200 million. Set with the intention of boosting funding for Chicago’s police and firefighter pension funds, the revenue lapse has raised eyebrows among local officials and stakeholders.

Despite these challenges, analyses from state revenue experts remain positive about Bally’s potential. They anticipate the gaming company to flourish with the introduction of its permanent $1.34 billion casino complex, slated for completion by 2026. This development promises a more expansive and inviting gaming environment which could attract more visitors and players.

Competition in the Illinois Gambling Market

The Illinois gambling market is a competitive arena, bustling with 15 other established casinos, 19,000 video gaming terminals embedded in local bars and restaurants, alongside several mobile sports betting platforms. This landscape creates formidable competition for Bally’s. Analysts anticipate a phenomenon known as "cannibalization," where incoming gaming options may siphon business from existing casinos. As noted by the state Commission on Government Forecasting and Accountability, the expansion of gaming options in the Chicago metropolitan area will likely direct some revenue away from established venues.

The Road Ahead: Optimism and Strategies

Despite the operational hurdles, Bally’s executives and state analysts are hopeful that once the permanent facility is constructed, it will dominate the region’s gaming scene. Bally’s is anticipated to outperform its competition, including Rivers Casino in Des Plaines, which achieved an impressive $560 million in revenue in the last year. Proponents argue that the allure of a permanent casino situated in the heart of Chicago should position Bally’s as a top contender.

Chicago Mayor Brandon Johnson has expressed confidence in Bally’s, linking the casino’s success to the city’s financial health. The mayor’s budget relies on projected tax revenue of $35 million for 2024, a figure that would require Bally’s to significantly ramp up its current earnings—a daunting task, considering it would need to triple its monthly performance.

Community Engagement and Job Creation

In addition to its financial undertakings, Bally’s has made notable contributions to the local community. The casino has created over 600 union jobs and facilitated the graduation of more than 200 students from its Dealer Training School. Furthermore, Bally’s has actively hosted job and vendor fairs aimed at promoting partnerships with local businesses. This level of community engagement signals a commitment to not just economic growth, but also social responsibility, which is vital for cultivating public support.

George Papanier, Bally’s president, expressed gratitude for the achievements made over the first year and enthusiasm for ongoing growth. He emphasized that Bally’s remains patient and resilient, stating, “We haven’t seen anything in this market that says we’re not as excited as we can be.”

Conclusion: A Casino for the Future

Bally’s journey as Chicago’s first casino has been a complex mix of triumphs and challenges in its opening year. While revenue has not met initial expectations, there remains a sense of optimism about the future. The anticipated opening of a permanent facility and ongoing community engagement efforts could well position Bally’s as a leader in the Illinois gambling market.

As the landscape of gaming continues to evolve with heightened competition and changing regulations, the coming years will reveal whether Bally’s can live up to its potential and contribute significantly to the city of Chicago’s economy.

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