After the horrific attack in Las Vegas, Susquehanna Financial Group downgraded MGM Resorts International (NYSE:$MGM) and cut its price forecast on the casino resort operator’s shares. However, Susquehanna Financial Group remains positive on the company in the long-term.
Based on historical patterns, the analyst cited the potential for occupancy and pricing shifts in near-term. She lowered her estimate for earnings for share by a penny for 2017 and by 14 cents for next year.
“As time passes, we are confident U.S. consumers and the dedicated employees at MGM will demonstrate their resiliency and business will rebound,” wrote Rachael Rothman, Susquehanna analyst. “But for now, we see heightened risk of negative revisions to estimates and are downgrading our rating on the shares from Positive to Neutral.”
Police announced on Monday that at least 59 people were killed and 527 injured after a gunman opened fire on roughly 22,000 concertgoers who were gathered at a festival across from the MGM Resorts-owned Mandalay Bay hotel. This was the deadliest mass shooting in modern United States history.
“Our hearts and prayers go out to the victims of last night’s shooting, their families, and those still fighting for their lives,” said MGM’s CEO Jim Murren. “We are working with law enforcement and will continue to do all we can to help all those involved.”
In her report, Rothman cited the effects of previous tragedies on hotel bookings and room pricing. For instance, after the terrorist attacks of September 11, 2001, cruise and lodging stocks traded off as much as 36%.
“Stock reactions to past tragedies have ranged from 8 percent to 36 percent,” said Rothman. “The risk to MGM’s share will ultimately be most heavily tied to the magnitude and duration of pricing/occupancy shifts, and increasing marketing costs.”
Since the devastating attack, MGM Resorts shares have fallen more than 5% and were on route for another day of losses in premarket trade Tuesday morning.
Susquehanna cut its 12-month price forecast on MGM’s shares from $38 to $33. The new price forecast is 7% higher than Monday’s closing price.
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