Casinos may be opening up around the country, but MGM Resorts' (NYSE:MGM) stock is likely to be stuck in place, because there's nothing to move it higher.
Jefferies analyst David Katz downgraded his rating of the resort operator to hold from buy and reduced his price target 23% to $17 per share today, arguing there are no catalysts for any price appreciation.
Going nowhere fast
The COVID-19 pandemic shut all casinos nationwide in March and only recently have states allowed them to begin opening again. That may not be enough to lift MGM's shares as the casino operator's core business has been at best deferred, but more probably canceled, for the foreseeable future.
While MGM Resorts has properties in China and several regional U.S. markets, Katz notes it is the biggest operator in Las Vegas with the greatest hospitality market share for the MICE (meetings, incentive travel, conventions, and events) business.
That business largely evaporated with the coronavirus outbreak and is not likely to return soon. Katz' note to investors points out that MGM's sale and lease-back of its domestic real estate didn't give it a higher valuation, and shareholder activism hasn't done much either. Last year, MGM gave a board seat to hedge fund operator Corvex Management to help increase shareholder value.
With a lack of additional catalysts to move the shares up, the analyst believes the casino operator's stock will trade in a narrow range.