Analyst Praveen Choudhary of Morgan Stanley maintained a Buy rating on Melco Resorts & Entertainment (MLCO – Research Report), retaining the price target of $6.70.
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Praveen Choudhary has given his Buy rating due to a combination of factors including the recent grand opening of Melco Resorts & Entertainment’s flagship show, ‘House of Dancing Waters’ (HODW), which historically led to a sustained market share improvement. The show is expected to attract more non-gaming visitors to Macau, potentially converting them into gamblers and increasing the company’s market share in gross gaming revenue.
Additionally, Choudhary highlights the company’s current valuation metrics, such as an 8x EV/EBITDA and an 11% free cash flow to equity yield, as attractive. The potential for deleveraging through the sale of the Manila casino and the conclusion of major capital expenditures are also seen as catalysts that could drive stock performance. The creative and visually appealing nature of the show, with 40% new content compared to its pre-COVID version, is considered a differentiating factor that could further enhance Melco’s competitive position.
In another report released on April 21, CBRE also maintained a Buy rating on the stock with a $8.00 price target.