Shares of Hong Kong-based Melco Resorts & Entertainment (MLCO) lost 3.9% and closed at $13.55 on Tuesday after the company’s second-quarter 2021 financial results missed estimates. Melco owns, runs and develops integrated resorts with casino and gaming facilities in Europe and Asia.
The company reported a net loss of $0.39 per share, narrower than the year-ago loss of $0.77 per share, but wider than the Street’s estimate of $0.36 per share. Total operating revenues surged 222% year-over-year to $566.4 million but fell short of analysts’ expectations of $615.16 million.
Total operating revenues at City of Dreams were $347.6 million, up from $105.4 million in the second quarter of 2020. Altira Macau’s operating revenues increased from $17 million to $18.3 million. Total operating revenues from Mocha Clubs amounted to $24.1 million, compared to $23.2 million a year ago.
Studio City’s operating revenues skyrocketed to $104.5 million from $10.9 million. Total operating revenues at City of Dreams Manila rose to $52.7 million from $7.2 million in the second quarter of 2020. Cyprus Casinos’ operating revenues climbed from $3.5 million to $10 million. (See Melco stock chart on TipRanks)
The Chairman and CEO of Melco, Lawrence Ho, said, “Mass and premium mass-market players have proven to be the primary drivers of the recovery this quarter and are expected to be going forward as we continue to dedicate our resources toward these segments of the market. We remain optimistic on our Macau market outlook, especially as Macau explores scenarios for more flexible travel with other cities in the Greater Bay Area.”
On July 15, HSBC analyst Charlene Liu downgraded the rating on the stock to Hold from Buy and lowered the price target from $21.10 to $16.90 (24.7% upside potential). The analyst said, “The gradual uptick in Macau gross gaming revenue from the Hong Kong re-opening appears priced into shares.”
Overall, the stock has a Moderate Buy consensus rating based on 5 Buys and 2 Holds. The average Melco Resorts & Entertainment price target of $21.32 implies 57.3% upside potential. The company’s shares have lost 24.5% year-to-date.
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