Valued at a market cap of $8.6 billion, MGM Resorts International (MGM) is a gaming and entertainment company that operates casino resorts that offer gaming, hotel, convention, dining, entertainment, retail, and other resort amenities. The Las Vegas, Nevada-based company also offers online/digital games through its online platforms.  

This resorts and casinos company has lagged behind the broader market over the past 52 weeks. Shares of MGM have declined 21.9% over this time frame, while the broader S&P 500 Index ($SPX) has surged 8.6%. Moreover, on a YTD basis, the stock is down 8.4%, compared to SPX’s 4.3% loss.  

Narrowing the focus, MGM’s underperformance looks less pronounced when compared to the VanEck Gaming ETF’s (BJK) 6.4% downtick over the past 52 weeks and 4.7% fall on a YTD basis.  

On Apr. 30, MGM delivered its Q1 earnings results. However, despite delivering better-than-expected revenue of $4.3 billion and adjusted EPS of $0.69, its shares plunged 1.9% in the following trading session. Investor sentiment might have been dampened by a 2.4% year-over-year decline in its revenue and a nearly 6.8% fall in its adjusted EPS figure. Weaker revenue contributions from the Las Vegas Strip Resorts and MGM China segments led to its top-line decline, which in turn impacted its bottom-line performance.  

Nonetheless, on the upside, MGM managed to reduce its operating expenses slightly compared to the same quarter last year. Additionally, the company is making strong progress on its $200 million EBITDA enhancement program and expects to implement over $150 million of these improvements within the current fiscal year. 

For the current fiscal year, ending in December, analysts expect MGM’s EPS to decline 21.6% year over year to $2.03. The company’s earnings surprise history is mixed. It topped the consensus estimates in three of the last four quarters, while missing on another occasion.  

Among the 18 analysts covering the stock, the consensus rating is a “Strong Buy” which is based on 14 “Strong Buy,” and four “Hold” ratings.   

This configuration is slightly less bullish than two months ago, with 15 analysts suggesting a “Strong Buy” rating.  

On May 5, Argus maintained a “Buy” rating on MGM but lowered its price target to $40, which indicates a 26% potential upside from the current levels.  

The mean price target of $45.74 represents a 44.1% premium from MGM’s current price levels, while the Street-high price target of $59 suggests an ambitious upside potential of 85.9%.