A gaming industry investment analyst is projecting a 40 percent increase in MGM Resorts International’s stock price in 12 to 18 months despite expecting short-term declines attributed to higher labor costs and expenses.
Harry Curtis, a gaming and lodging analyst with New York-based Nomura Equity Research, said trade show and conference bookings were increasing in volume, pushing group rates higher.
Nomura maintained its “buy” rating on MGM stock Friday after issuing a report saying that the group meeting industry was expanding at a faster clip than originally anticipated.
The report said optimism from group meeting planners for continued recovery in Las Vegas was based on “a 25 percent increase in convention requests for proposals in 2011 and an expected 20 percent increase in 2012, a shortening of time from RFP to contract signing and a broading of the base of industries seeking group space.”
Curtis said he was optimistic on incremental share gains for Las Vegas because of increasing attendance at annually conferences held in Las Vegas, room demand exceeding the number of booked rooms, a continued perception that Las Vegas is a value destination and the return of conferences that had left due to the stigma of holding a conference in Las Vegas between 2008 and 2010.
MGM stock, which closed Thursday at $14.71 a share, is projected by Nomura to climb toward $20 in the next year to 18 months. The company is lowering its short-term cash flow expectations because of higher fixed costs, including wages and benefits.