Casino owner MGM Resorts International (MGM 3.55%) began the week on a positive note with an analyst upgrade based on the reopening gaining steam in Las Vegas. Investors reacted by pushing the stock up about 7%, as of 10:40 a.m. EDT.
As the vaccination rollout increases the number of people willing to travel, analysts are beginning to price the recovery into stock valuations. In a note to investors on Monday, Morgan Stanley analysts upgraded MGM stock to an overweight, or buy, rating. The firm also increased its target price to $45 per share, according to MarketBeat. MGM shares are currently trading at about $42.
Morgan Stanley analyst Thomas Allen told investors industry participants have been indicating strong bookings, and booking windows are moving further out. Allen also noted that Las Vegas locations are already busy. He added in the note to investors, "those customers illustrated demand for Vegas is there and are spending more per visitor than they have in the past."
MGM isn't just relying on its casino locations in Las Vegas and Macao, however. It is growing its online gaming and sports betting business as well. The casino operator's BetMGM online wagering app launched in 2018 and has been steadily expanding into more U.S. states.
But the casino properties are still what move the needle for the company, and it was welcome news for investors that MGM resumed 24/7 hotel operations at Mandalay Bay, Park MGM, and The Mirage in Las Vegas on March 3.