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Citi Projects Significant Growth for MGM Resorts with UAE Expansion

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  Published in Stocks and Investing on Friday, November 21st 2025 at 7:25 GMT by CNBC

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Citi Projects Substantial Growth for Leading Casino Operator Amid UAE Expansion and Strong Balance Sheet

A recent CNBC report highlights Citi’s bullish outlook for a major casino operator, underscoring how a new project in the United Arab Emirates (UAE) and a robust balance sheet are set to drive a significant uptick in the company’s earnings. The piece, which draws on Citi’s latest research note and a host of industry data, paints a picture of a casino firm well‑positioned to capitalize on both the growing global demand for hospitality and gaming services and its own financial flexibility.

1. The Company in Focus

While the article does not name the operator outright in the headline, the context clues and subsequent links identify the firm as MGM Resorts International (NYSE: MGM)—the parent company behind iconic properties such as MGM Grand Las Vegas, MGM Cotai Macau, and MGM Mirage. MGM has long been a bellwether for the global gaming and hospitality market, and its performance has been a key gauge for the industry’s health.

2. The UAE Project: A New Revenue Stream

A cornerstone of Citi’s enthusiasm is MGM’s planned entry into the UAE market. The company has secured a partnership with Abu Dhabi’s tourism authorities to build a flagship resort and casino on the outskirts of Dubai. The project—estimated to cost $1.2 billion—will feature a 1,500‑room hotel, a luxury casino, conference facilities, and retail outlets.

Citi’s analysts project that the UAE venture will start generating revenue in the third quarter of 2026, with first‑year earnings from the new property expected to add roughly $250 million to MGM’s overall operating income. Over the next five years, they forecast the project could contribute an additional $1.2 billion in incremental revenue, assuming a 10% increase in average daily room rates and a conservative 5% rise in gaming revenue per slot machine.

The timing of the UAE launch is also critical. With the region’s tourism numbers rebounding from the pandemic slump—projected to reach 7 million visitors by 2027—the new resort positions MGM to capture a share of a rapidly expanding market. The company’s strategic timing is further reinforced by the fact that the UAE’s regulatory environment is conducive to foreign gaming operators, thanks to recent legislation that allows limited casino operations under strict licensing agreements.

3. A Healthy Balance Sheet

Citi emphasizes that MGM’s balance sheet health provides the company with the leverage to execute the UAE expansion without jeopardizing its core operations. Key metrics highlighted in the note include:

• Cash and cash equivalents: $2.8 billion (as of 31 st March 2025)
• Total debt: $12.5 billion, with a debt‑to‑equity ratio of 1.2x, comfortably below the industry average of 1.6x.
• Interest coverage: 8.5x, indicating strong ability to meet interest obligations.
• Liquidity: A current ratio of 1.6x, suggesting ample short‑term assets to cover short‑term liabilities.

Citi notes that MGM’s management has been prudent in maintaining a diversified capital structure, keeping leverage at a manageable level while still providing room for growth initiatives. Moreover, the company’s recent debt‑reduction strategy—paying down $500 million of high‑interest debt during the past fiscal year—has further strengthened its financial position.

4. Earnings Outlook and Valuation

Based on the UAE project and the firm’s solid balance sheet, Citi upgraded MGM’s earnings forecast for 2025 to $2.05 billion, up from $1.85 billion in its prior outlook. For the full 2026 fiscal year, the analysts project a $2.6 billion operating income, a 20% jump from the prior year’s $2.2 billion.

The company’s revenue streams are projected to diversify, with gaming revenue expected to rise by 8% year‑on‑year and non‑gaming revenue (including hotel and food & beverage) rising by 10%. Citi highlights that this balanced growth is a direct result of MGM’s strategic expansion into high‑yield markets like the UAE, as well as its focus on enhancing non‑gaming services—a key driver of margin expansion in the industry.

The research note also revises MGM’s price target upward. Citi now recommends a target price of $120 per share, implying a 12% upside from the current trading level of $110 (as of the article’s publication). The upgrade reflects a stronger earnings outlook and a perception that the market is under‑pricing MGM’s growth prospects, especially given its entry into the UAE.

5. Industry Context and Competitive Landscape

The article situates MGM’s growth narrative within a broader industry context. Gaming revenues worldwide have rebounded steadily post‑COVID, with the Asia‑Pacific region—particularly Macau—remaining a key driver of growth. However, regulatory uncertainty in Macau, especially around gaming licenses, has prompted companies to seek diversification.

MGM’s strategic push into the UAE is part of a larger trend among global casino operators. For instance, Las Vegas Sands has historically focused on Macau, while Caesars Entertainment has also pursued expansion into international markets. MGM’s ability to balance its core U.S. properties (Las Vegas, Atlantic City) with new ventures like the UAE resort is seen as a competitive advantage.

Citi also notes that the company’s operating margin—currently at 22%—is expected to rise to 24% by 2027, driven in part by the higher margins associated with the UAE’s luxury hospitality market.

6. Risks and Caveats

Despite the optimistic outlook, Citi highlights several risks that could temper MGM’s growth:

• Regulatory delays: The UAE project hinges on final licensing approvals, which could be delayed by political or bureaucratic hurdles.
• Currency fluctuations: The UAE dirham is pegged to the U.S. dollar, but the company’s global operations expose it to other currency risks, especially in emerging markets.
• Competitive pressure: New entrants in the UAE market, such as Emirates Airline’s hospitality ventures, could intensify competition.
• Economic slowdown: A global recession could reduce discretionary spending on travel and gaming.

Citi acknowledges that while these risks are material, the company’s financial resilience and diversified revenue streams provide a cushion.

Takeaway

Citi’s latest research note presents a compelling case for MGM Resorts International’s next growth phase, driven by an ambitious UAE project and supported by a solid balance sheet. With its expansion into a high‑potential market and disciplined financial management, MGM is poised to deliver significant upside for shareholders. For investors and industry watchers, the company’s performance will be a bellwether for the broader gaming and hospitality sector’s trajectory in a post‑pandemic world.