Categories: Casino

MGM stock to recover quickly following attack, says analyst

Analysts are confident that MGM Resorts International will fully recover despite experiencing a cyber attack. According to their comprehension, the attack will not have any significant negative consequences.

In a recent statement, David Katz, an equity analyst with New York-based Jefferies, placed a price of $69 per share on MGM shares. As a result, MGM shares were traded shortly thereafter at $37 per share.

According to Katz, the cyber attack will have an impact on the third-quarter results for 2023 and will gradually diminish by the fourth quarter. The situation is then anticipated to become stable. They are in the process of aligning their results for the second half of 2023 with those of MGM. According to him, insurance will cover the damage adequately, and 2024–2025 will establish a balance. Their optimism originates from the thriving market in Las Vegas.

Katz referred to MGM’s SEC report from October 5, 2023, which mentioned the September cyber attack that impacted MGM’s computer operations, which took nine days to recover. Through that report, MGM predicted a $100 million effect on cash flow and spoke of a one-time $10 million expense for the purpose of technology consulting fees, along with legal fees and various other miscellaneous costs. 

According to the report, this cyber attack on MGM and Caesars Entertainment testifies to the measures taken by businesses to mitigate cyber threats. In this particular instance, human error was to blame; consequently, appropriate training is a necessity. There is also the insurance aspect, which serves as a safety net for the companies.

Katz predicts revenue and cash flow to the tune of $3.53 billion and $1.039 billion, respectively, as compared to $3.738 billion and $1.16 billion before the cyber attack took place. He goes on to add that the earning potential from the upcoming Formula One Las Vegas Grand Prix race should bring down the negativity. Added to that will be the Super Bowl, which will be in February 2024.

In the case of fiscal year 2023, the revenue and cost of the initiatives will be reduced to $15.251 billion and $4.51 billion, respectively, from $15.461 billion and $4.642 billion previously. The objective is set at $69.

Scott Mitchell

Scott Mitchell has done his bachelor's degree in journalism. He has also worked for many poker industries as a news editor and has excellent knowledge about casino games. He likes to play casino games and share his experience on social media.

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