Forget A Vegas Recovery, It’s All About Macau

Forget a Vegas Recovery, It’s All About Macau by Jayson Derrick, The Motley Fool Jan 11th 2014 7:26AM Updated Jan 11th 2014 7:28AM On Jan. 6, MGM Resorts International was upgraded to “buy” from “neutral” at Citigroup and given a $29 price target. The main thesis of the analyst report was that MGM Resorts can provide investors with exposure to the ongoing Las Vegas recovery. US economy expansion Economists continue to project an improving economy, which bodes well for domestic casino operators such as MGM. Economists at Fitch are projecting GDP growth of 2.4% in 2014 and 3.1% in 2015. This is important because there is a strong correlation between US GDP growth and the share price performance of MGM Resorts. When US real GDP growth bottomed out, MGM Resorts’ share price significantly outperformed the S&P 500 index in the following year. Year GDP Bottomed MGM return in the following year S&P 500 return in the following year 1995 12% 13% MGM Resorts’ Las Vegas hotel revenue has been improving consistently over the last three years due to a stronger visitation rate and a solid recovery in the convention business.
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