MGM Stock Tumbles After CEO Departure

The news is attracting analysts' attention

by Lillian Currens

Published on Feb 13, 2020 at 9:21 AM

The shares of MGM Resorts International (NYSE:MGM) are running lower this morning, just one day after news broke that the firm's CEO Jim Murren has decided to step down. The casino company's board also withdrew its full-year forecast for the time being, blaming coronavirus anxieties, though Murren added that he believes the economic effects of the deadly virus will only be in the near term. MGM is down 2.9% before the open at last check. 

The news has attracted analysts' attention, with Deutsche Bank lifting it target price to $35 from $34, putting the 12-month consensus target price at $35.75, which is a 6.2% premium to last night's close. Meanwhile, the brokerage bunch is still exercising caution around the casino name, with seven in coverage calling it a "hold" or worse, compared to only four calling it a "strong buy."

Sentiment in the options pits has also been bearish. In the last 10 weeks, 1.19 puts were bought for every call at the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 95% of all other readings from the past 12 months, suggesting a bigger-than-usual appetite for long puts of late. 

This dip has MGM on pace to snap its three-day win streak and erase its weekly gains entirely. It also has the equity testing the 100-day moving average once again, which has provided support on the chart since its late-January tumble off its one-year peak of $34.67. 

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