Shares of MGM Mirage continued to climb Thursday, as analysts remained positive on the casino operator's $5 billion investment from a Dubai holding company.
On Wednesday MGM said Dubai World would pay $2.7 billion for a 50 percent stake in its $7.4 billion CityCenter megaresort in Las Vegas. The complex, which is still under construction, is targeted for completion in late 2009.
Dubai World will also purchase up to $2.4 billion in MGM's stock. Some of the shares will be bought through an $84-a-share tender offer.
Fritz Owens of Calyon Securities said in a note to clients that the investment will lower MGM's debt, giving it more room to pursue developments such as a CityCenter East complex in Atlantic City, N.J. He also expects the company to go after additional joint ventures and strategic partnerships, predicting more such transactions will occur before the year is over.
Owens raised his fourth-quarter earnings estimate by 3 cents to 54 cents per share and his 2008 estimate by 18 cents to $2.85 per share. He increased MGM's price target to $94 from $88.
J.P. Morgan Securities Inc. analyst Harry Curtis anticipates Dubai World raising its interest in MGM to 20 percent once the tender offer is complete and MGM issues an additional 14 million shares associated with the deal.
The stock purchase, coupled with speculation Kirk Kerkorian will not participate in the tender offer, should keep MGM's stock trading in the mid-$80 range, Curtis wrote in a note.
Analysts have said the Dubai transaction will lower Kerkorian-led Tracinda Corp.'s stake in MGM to about 52 percent from 54 percent.
"In our view, there is further medium- to long-term upside from further value-creating joint ventures and capital management," he said.
Curtis maintained an "Overweight" rating on MGM.
Shares of MGM Mirage (nyse: MGM - news - people ) added $2.10, or 2.6 percent, to $83.04 in morning trading. The stock has traded between $34.56 and $88.69 over the past year.
Copyright 2007 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed Source
On Wednesday MGM said Dubai World would pay $2.7 billion for a 50 percent stake in its $7.4 billion CityCenter megaresort in Las Vegas. The complex, which is still under construction, is targeted for completion in late 2009.
Dubai World will also purchase up to $2.4 billion in MGM's stock. Some of the shares will be bought through an $84-a-share tender offer.
Fritz Owens of Calyon Securities said in a note to clients that the investment will lower MGM's debt, giving it more room to pursue developments such as a CityCenter East complex in Atlantic City, N.J. He also expects the company to go after additional joint ventures and strategic partnerships, predicting more such transactions will occur before the year is over.
Owens raised his fourth-quarter earnings estimate by 3 cents to 54 cents per share and his 2008 estimate by 18 cents to $2.85 per share. He increased MGM's price target to $94 from $88.
J.P. Morgan Securities Inc. analyst Harry Curtis anticipates Dubai World raising its interest in MGM to 20 percent once the tender offer is complete and MGM issues an additional 14 million shares associated with the deal.
The stock purchase, coupled with speculation Kirk Kerkorian will not participate in the tender offer, should keep MGM's stock trading in the mid-$80 range, Curtis wrote in a note.
Analysts have said the Dubai transaction will lower Kerkorian-led Tracinda Corp.'s stake in MGM to about 52 percent from 54 percent.
"In our view, there is further medium- to long-term upside from further value-creating joint ventures and capital management," he said.
Curtis maintained an "Overweight" rating on MGM.
Shares of MGM Mirage (nyse: MGM - news - people ) added $2.10, or 2.6 percent, to $83.04 in morning trading. The stock has traded between $34.56 and $88.69 over the past year.
Copyright 2007 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed Source
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