MGM Resorts International
averted a strike by reaching a tentative deal with the Culinary and Bartenders unions ahead of a Friday strike deadline.
The new, five-year contract includes wage increases, workload reductions for guest room attendants, and increased safety protections for workers on-the-job.
“We applaud
MGM
Resorts International, a company with which we have an over 40-year relationship, for showing leadership and doing the right thing to ensure their employees are treated with respect,” said Ted Pappageorge, secretary-treasurer of the Culinary union, in a statement. The Culinary and Bartenders unions negotiate together.
MGM Chief Executive Bill Hornbuckle said in a statement to Barron’s that the company was pleased to have reached a tentative agreement that averts a strike, “gives our Culinary Union employees a well-earned boost to pay and benefits and reduces workloads—all while continuing to provide opportunities for growth and advancement.”
Shares of casino operator MGM were down 1.1% Thursday to $38.20. The stock has gained 14% this year.
Caesars Entertainment
(CZR) also reached a tentative deal with labor unions on Wednesday. Wynn Resorts (WYNN) remains in negotiations.
Deutsche Bank analyst Carlo Santarelli wrote in a note before the tentative agreement was reached that he believes the conclusion of the negotiations “will serve as a welcome relief for investors, and a positive for stocks.” He rates MGM as a Buy but lowered his price target to $50 from $56 due to the certainty of increased costs and an uncertain economic environment.
On Wednesday,
MGM
reported third-quarter earnings of 64 cents a share on revenue of $3.97 billion. Analysts surveyed by FactSet were expecting the company to post earnings of 52 cents a share on revenue of $3.86 billion.
“MGM is an LV [Las Vegas] Strip-centric earnings momentum story that continues to impress,” Wells Fargo analyst Daniel Politzer said in a research note. The analyst maintained his Overweight rating and $54 price target on the stock.
MGM a year earlier reported a loss of $1.39 a share on revenue of $3.42 billion. The company said in a press release that the revenue increase was due to the removal of Covid-19 related entry restrictions in Macau.
“Results have been outstanding because of the ingenuity and execution of the team at the
MGM China,
” Chief Executive Bill Hornbuckle said on the earnings conference call Wednesday. MGM China revenue of $813 million surged 829% from the same period last year.
Wynn stock was down 0.8% Thursday to $92.15. Wynn is scheduled to report third-quarter earnings after the closing bell Thursday.
Write to Angela Palumbo at [email protected]
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