Investing.com -- Stifel downgraded casino operators Caesars Entertainment and MGM Resorts International to Hold from Buy, arguing that recent takeover proposals have largely exhausted near-term upside potential while leaving investors exposed to significant deal-execution risks.

For Caesars, Stifel said it now expects Fertitta Entertainment's $31-per-share acquisition offer to ultimately be completed, despite viewing the bid as conservative. The brokerage noted that support from major shareholders and a lack of likely competing bidders make a materially higher offer unlikely. With Caesars shares trading close to the proposed takeout price, Stifel believes the stock's risk-reward profile has turned neutral and downgraded the shares to Hold with a $31 price target.

The firm cautioned that the acquisition could take 12 to 18 months to close because of extensive gaming regulatory approvals. Should the transaction collapse, Stifel estimates Caesars shares could fall back toward pre-speculation levels in the low-$20 range, creating meaningful downside risk for investors.

Stifel remains constructive on Caesars' long-term fundamentals, citing improving Las Vegas Strip trends, growth in its digital business and resilient regional gaming demand. However, it said those positives are now overshadowed by the pending acquisition process and limited upside from current levels.

For MGM Resorts, the brokerage also moved to Hold, citing concerns that shares are already trading above People Inc.'s $48.30-per-share take-private proposal. Stifel said investors appear to view the initial offer as inadequate, reflecting MGM's higher-quality asset portfolio, exposure to Macau, premium Las Vegas Strip properties, digital gaming operations and long-term growth projects such as Japan's integrated resort market.

While Stifel believes People Inc. Chairman Barry Diller may need to raise his bid to secure board approval, the firm sees limited upside even in a favorable outcome and significant downside if negotiations fail. It raised its target price modestly to $49 but said the stock's current valuation leaves risk skewed to the downside.

The brokerage added that a successful MGM transaction could trigger broader consolidation across the gaming sector, potentially leaving operators such as Wynn Resorts as one of the few remaining publicly traded ways for investors to gain direct exposure to the Las Vegas Strip.