MGM Mirage Investors Could See Smaller Jackpot
Written on June 22, 2006 by admin
June 22, 2006 | Forbes | MGM Mirage's core business still appears sound but shares of the casino company look a little pricey compared to competitors, according to a report from Morgan Stanley.The research firm downgraded MGM Mirage to "underweight" from "equal-weight," but cautioned investors that this doesn't mean they should sell the stock.
"Our downgrade reflects relative valuation, not MGM fundamentals," wrote Morgan Stanley analyst Celeste Mellet Brown in report Tuesday. "This is not a 'sell' call, especially given the recent trading of the entire group."
MGM Mirage, based in Las Vegas, owns 24 casino resorts throughout the U.S. Among the company's most famous properties are the MGM Grand, Luxor and Bellagio.
Shares of MGM Mirage could potentially rise 25% over the next 18 months, according to Morgan Stanley. However, the research firm believes other names in the gaming sector have greater near-term upside potential.
Morgan Stanley's "overweight" ratings in the sector include Harrah's Entertainment, Wynn Resorts and Starwood Hotels and Resorts.
"We continue to expect MGM to announce additional projects in Macau, as well as additional condo projects in Las Vegas," said the analyst.
She added that these projects are already reflected in the share price.
The analyst raised the target price on MGM to $50 from $47.
Technorati Tags: Entertainment, macau
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