MGM Resorts International (MGM) Stock Keeps Rising After Raised Outlook

MGM Resorts International (NYSE:MGM) is trading higher yet again, after the company raised its profit outlook

Jun 17, 2016 at 11:20 AM
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Casino stock MGM Resorts International (NYSE:MGM) has been on fire since bottoming near $16 in February. The stock has added almost 54%, and has outpaced the S&P 500 Index (SPX) by 14 percentage points in the past three months. On a closer look, the shares bounced sharply from their 50-day moving average in May. Today, MGM is up another 2.7% at $24.83, after the company raised its profit forecast for the upcoming year. 

Unsurprisingly, sentiment toward the stock is rather bullish across the Street. Most notably, 12 of the 13 analysts that cover MGM say it's a "buy" or "strong buy," while not a single brokerage firm recommends selling the stock. Moreover, the shares' have a consensus 12-month price target of $28.40, territory not explored in over two years. 

Options traders have also displayed bullish tendencies. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MGM's 50-day call/put volume ratio comes in at 3.92, meaning almost four calls have been bought to open for every put. Plus, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.89 indicates call open interest outweighs put open interest in the front three-months' series of options. 

This trend is continuing today, as call volume is accelerated, outpacing put volume by a nearly 10-to-1 margin. In fact, nine of the 10 most popular MGM options are calls, with the August 25 strike taking the top spot. Short-term speculators are enjoying relatively low premiums, too, according to the stock's Schaeffer's Volatility Index (SVI) of 35%, in the 12th annual percentile. 

At the same time, MGM Resorts International (NYSE:MGM) sports a healthy short-interest ratio of 3.70 -- meaning there's still some pent-up buying power on the sidelines. Short interest on MGM has dropped by 38% since this time last year, and the stock could continue to gain, if this trend continues. 

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