JPMorgan upgrades MGM Resorts, sees 20% upside on rebounding Las Vegas demand

Investing.com -- JPMorgan Chase & Co. has upgraded MGM Resorts International to “Overweight” from “Neutral,” citing improving leisure travel demand, stabilizing room rates on the Las Vegas Strip, and attractive valuation metrics.

The investment bank raised its December 2026 price target for MGM shares to $46 from $41, implying roughly 20% upside from the stock’s recent closing price of $38.45. JPMorgan said MGM currently trades at an implied 14% free cash flow yield, which it views as inexpensive relative to peers.

Analysts led by Daniel Politzer said MGM’s Las Vegas Strip earnings estimates “appear to have bottomed” after a difficult second half of 2025, with improving travel trends now supporting a recovery outlook.

JPMorgan’s proprietary room-rate survey showed MGM’s second-quarter 2026 room rates tracking up 1% year-over-year, an improvement from the 2% decline projected earlier this year. Luxury properties including Bellagio, Aria, Cosmopolitan, and Mandalay Bay showed particularly strong momentum, while lower-tier properties appeared to stabilize.

Las Vegas’ tourism trends has been improving. Strip visitor volumes rose in February and March for the first time in 13 months, while Strip RevPAR (revenue per available room) has now grown for three consecutive months.

According to JPMorgan’s analysis of Chase spending data, U.S. discretionary travel spending increased 4.1% year-over-year in May, with growth seen across income groups. Upper-income consumers remained the strongest spenders, though middle- and lower-income cohorts also showed resilience.

Investors have expressed concern that the planned opening of Hard Rock International’s Las Vegas resort in late 2027 could pressure existing Strip operators. However, JPMorgan argued that historical precedent suggests major new resorts tend to expand overall demand rather than merely shift market share.

The bank estimates that even a 1% revenue hit to MGM’s Strip business would reduce the company’s valuation by only about $1.80 per share, or roughly 5% of its current stock price.

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