Caesars and MGM Forecast 30% and 29% Upside

Caesar and MGM’s logos

Caesar and MGM’s logos
Macquarie analyst Chad Beynon views Caesars Entertainment and MGM Resorts International as exceptional investment prospects for the upcoming year, as the glittering lights of the Las Vegas Strip continue to dazzle. Beynon reiterates his “outperform” ratings for three important Strip operators in a recent analysis, indicating significant upside potential.

Although Caesars and MGM had different results in 2023—Caesars increased by 12.69% and MGM by 33.25%—both operators are expected to do well in 2024. Beynon’s positive projections rely on Caesars’ calculated debt reduction and the anticipated efficiency improvements in its digital gambling division. The analyst cites the explosive gross gaming revenue (GGR) data from November, which showed a 23% YoY increase to a record $821 million, driven mostly by a noteworthy 62% YoY gain in table revenue.

Beyond the Tables: Factors Fueling Optimism for Caesars, MGM, and the Las Vegas Strip

Beynon’s optimism goes beyond the casino tables, emphasizing the continued advantages of regular events like as Formula One, the development of the Sphere entertainment complex, and the Oakland Athletics’ planned relocation to Las Vegas. The expert highlights the Strip’s promising future, predicting continued expansion through 2024 and beyond, with big events like Super Bowl LVIII heightening the appeal for affluent patrons.

A new investment story for 2024 is developing amidst the glitz and glamour of the Las Vegas Strip, with Caesars Entertainment (CZR) and MGM Resorts International (MGM) assuming a central role. Reputable industry analyst Chad Beynon of Macquarie produced a study lately identifying these two titans as winning equities ideas for the future year.

Optimism is sparked by November’s remarkable gross gaming revenue (GGR) figure for Nevada casinos, especially those on the renowned Las Vegas Strip. According to the report, income increased by an astounding 23% year over year to an unprecedented $821 million. Due in large part to the attraction of the F1 weekend and the Sphere entertainment venue, there has been a notable 62% increase in table income year over year.

Caesars and MGM: Poised for 2024 Triumph Despite Divergent 2023 Performances

Despite both casinos suffering from ransomware attacks, Caesars and MGM had different years in 2023—the Flamingo operator experienced a rise of 12.69%, while the Bellagio operator had a rise of 33.25%—both are predicted to do well in 2024. Beynon’s optimistic forecasts rely on Caesars’ calculated efforts to cut debt and the expected productivity increases in its division dedicated to online gambling.

Beyond the casino tables, Chad Beynon sees continued advantages from regular events such as Formula One, the development of the Sphere, and the Oakland Athletics’ impending move to Las Vegas. These elements, along with the encouraging outcomes from November, provide hope for the first quarter of 2024. In addition, Las Vegas is expected to draw a sizable influx of affluent patrons as the host city of Super Bowl LVIII, a significant marquee event.

There are other publicly traded casino companies in the mix, but Caesars and MGM seem to be stealing the show. Beynon rates Wynn Resorts (WYNN) as “neutral” due to the company’s heavy reliance on two integrated resorts in Macau. The “outperform” rating for Golden Entertainment (GDEN), which has a varied portfolio that includes locals market businesses in Las Vegas and the Strip-adjacent Strat, indicates a potential upside of 29%. With Caesars and MGM leading the way and a variety of opportunities awaiting investors among the city’s different gaming equities, 2024 is shaping up to be a lively year on the Las Vegas Strip.

Author: Eugene Gray