Yeah, that's probably right. That saying in full might imply an indifference, by omission, but that's at most arguable, and it's probably not fair to take the first line, which I quoted, as an Alexander-like abdication.
On the other hand, Muhammad had so much authority in his final years that it seems as though he could surely have made his successor perfectly clear, if he had really wanted to do that. And yet the successor who did emerge did so with the claim to have been elected by the faithful after Muhammad's death, not to have been designated by Muhammad. So it seems like a reasonable deduction that Muhammad wasn't all that concerned about exactly who carried on after him. Maybe he had preferences, but if they had been really serious then he could have enforced them, and he didn't.
At any rate I think that's the reasoning of scholars who use that one quote as a symbol for Muhammad's insufficiently strong succession preference. Clearly Shias have a different take on the matter. My limited impression is that they don't so much dispute the weight of those arguments as rely on outweighing them with explicit endorsements of Ali by Muhammad, while Sunnis deny that Muhammad ever gave such endorsements.
The relevance I see to the Mormon analog is a support for Kishkumen's point that there was not actually any need for a miracle of transfiguration to establish Young's succession. "We picked a successor and he worked out okay" has been good enough for Sunni Islam, so it should be good enough for the LDS church.