- Stock battered this year on Las Vegas, leverage concerns
- Analyst praises MGM for New York decision, Ohio casino sale
- MGM stock risk/reward favors the upside, he says
Down 5.21% year to date while the S&P 500 is higher by 14.5%, MGM Resorts International (NYSE: MGM) stock is a clear laggard, but it could shed that dubious distinction in 2026.
In a new report to clients, Stifel analyst Steven Wieczynski acknowledges that shares of the Cosmopolitan operator have been pressured this year by leverage concerns and the slumping visitation on the Las Vegas Strip, where MGM is the largest operator, but he adds the stock could be a 2026 breakout/rebound candidate.
We believe the setup for 2026 is overly attractive and believe the risk/reward at current trading levels is too compelling to pass up, thus we believe investors should be revisiting the MGM story,” observes the analyst.
Wieczynski reiterated a “buy” rating on the casino equity while trimming his price target to $47 from $50. His new price objective implies upside of about 42% from the October 21 close.
Market Has ‘Draconian Outlook’ on MGM Stock
With the stock trading around 3x (excluding BetMGM and MGM China), estimated 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA), it’s fair to say MGM’s valuation is depressed, perhaps the result of market participants assigning what Wieczynski describes as a “Draconian outlook” to the shares.
That ominous view is derived in part from fears around operating leverage and that the gaming company may be too aggressive when it comes to capital allocation. The operator recently allayed some of those concerns, surprising investors and the industry when it said last week it’s bowing out of the New York City casino race.
MGM took another step in the right direction on October 16 when it announced the sale of the operating rights to MGM Northfield Park in Ohio to Clairvest Group for $546 million in cash. That transaction will result in after-tax proceeds of $420 million while reducing the seller’s long-term lease obligations to landlord VICI Properties (NYSE: VICI). Wieczynski praised both decisions.
“We 100% agree with this decision (New York) as we never saw a path to a decent return on the ~$2.3 billion MGM was going to invest in that market given the absurd tax rate and aggressive competition (and that’s even before NJ does anything),” adds the analyst.
Regarding the divestment of the Ohio casino, Wieczynski points out that given the terms of that deal (a 6.5x multiple), the implication is that MGM stock is worth $57 and acts as “a sign that MGM’s management team has hopefully found some capex religion.”
MGM Still Needs to Be Prudent
While MGM stock is cheap and the operator is generating cash by selling Northfield Park and saving capital by not pursuing a New York City license, the company still needs to exercise prudence. Said another way, investors likely don’t want to see splashy acquisitions, but rather a focus on growth opportunities such as Japan, Macau, and high-end regional casinos.
“Our fear would be MGM now goes and does something irrational (like buying the remaining BetMGM stake or buying all of Entain), but we view the probability of something like that as very low right now given the fact we believe MGM’s management fully understands leverage reduction is/should be their top priority,” concludes the Stifel analyst.
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