What Happened?
Shares of hospitality and casino entertainment company MGM Resorts (NYSE: MGM) jumped 8.8% in the morning session after JPMorgan upgraded its rating on the company's stock to Overweight from Neutral.
The firm also increased its price target for MGM Resorts to $46 from $41. An Overweight rating typically suggests that an analyst believes the company's stock will perform better than the average return of the stocks the analyst covers. The upgrade indicates a more positive outlook on the company's future performance from the investment bank.
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What Is The Market Telling Us
MGM Resorts’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock gained 11.5% on the news that its joint venture, BetMGM, reported better-than-expected fiscal year 2025 results, showing a significant improvement in profitability and revenue.
The sports betting operator, which is jointly owned with Entain, posted net revenue of $2.8 billion for the year, a 33% increase from the previous year. The company also reported a major turnaround in profitability, with earnings before interest, taxes, depreciation, and amortization (EBITDA) of $220 million, a substantial improvement from the previous year's loss.
This strong performance allowed BetMGM to return $270 million in cash to its parent companies in the fourth quarter, marking its first significant return of capital. Looking ahead, the venture also provided a positive forecast, expecting net revenue to be between $3.1 billion and $3.2 billion for fiscal 2026.
MGM Resorts is up 15.9% since the beginning of the year, and at $42.30 per share, it has set a new 52-week high. Despite the year-to-date gain, investors who bought $1,000 worth of MGM Resorts’s shares 5 years ago would now be looking at only $965.81.
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