Bank of America Securities analyst Karl Choi has maintained their neutral stance on MLCO stock, giving a Hold rating on April 23.
Karl Choi has given his Hold rating due to a combination of factors influencing Melco Resorts & Entertainment’s financial outlook. The company’s first-quarter 2025 hold-adjusted EBITDA was in line with expectations, although the property EBITDA, when adjusted for higher-than-expected holds, showed minimal growth compared to previous quarters. While the Macau properties experienced a slight increase in market share, the transfer of VIP operations from Studio City to City of Dreams affected the growth dynamics of these properties.
Despite share repurchases, Melco prioritizes debt repayment, and its valuation appears inexpensive at 8.6x 2025E EBITDA and 5.5x cash P/E. However, the preference for gaming operators with higher dividend yields amid uncertain sector growth contributes to the Neutral rating. Additionally, the company witnessed a positive impact from the return of the House of Dancing Water show, which extended the Golden Week’s benefits, but strategic reviews for properties like COD Manila are still in progress, adding to the cautious outlook.