Bernstein discusses MGM financial target

According to brokerage Sanford C Bernstein, MGM’s EBITDA target for 2020 is too ambitious as it aims to post an up to €3.5 billion figure.

US.- MGM Resorts recently released its “MGM 2020 Plan” and aimed to add a total €270 million incremental EBITDA. However, brokerage Sanford C. Bernstein questioned the operator’s forecasts. According to Bernstein, MGM targeted €3.5 billion EBITDA for 2020 is too ambitious. 

The plan would cut the company’s costs and improve its revenues. Its Phase 1 is set to end in early 2020 and generate €179 million in EBITDA. It primarily looks to cut labour costs by eliminating duplicate functions/personnel at the property level.

Phase 2 targets customers and technology upgrades to enhance their experience. It aims at increased customer spend and increased share of wallet. As AGBrief quoted Bernstein, MGM’s plan is to attract the most valuable customers. 

“After “MGM 2020”, the company will have leaner and more cost-effective operations and with a more centralised management strategy. However, the real question is how some of these “revenue optimization” and cost-cutting measures would ultimately affect the company’s relationship with its customers,” Bernstein assessed. “(Moreover) whether the company can sustain long-term growth… is “nickel and diming” a sustainable driver for MGM performance.”