On Monday, Melco Resorts & Entertainment Limited (NASDAQ:MLCO) received an upgrade from Morgan Stanley (NYSE:MS) from Equalweight to Overweight, with the price target being raised to $9.60 from the previous $8.30. The adjustment comes in the wake of observed market share trends that have shown signs of stabilization and improvement in March and April.
The analyst from Morgan Stanley noted the positive shift in Melco's market position and anticipated a significant rise in the company's Free Cash Flow to Equity (FCFE) by the year 2025 compared to 2024. This expectation of increased cash generation is a key factor behind the enhanced price target.
The commentary from the analyst highlighted the attractive risk/reward profile of Melco Resorts in comparison to its industry peers. This perspective is supported by the continued growth in Gross Gaming Revenue (GGR) across Macau's gaming sector, which suggests a favorable environment for Melco's business.
The upgrade reflects a more optimistic outlook on Melco's financial performance and its potential to capitalize on the expanding market. The increased price target of $9.60 represents Morgan Stanley's confidence in the company's future prospects within the competitive landscape of Macau's gaming industry.
InvestingPro Insights
Following the upgrade by Morgan Stanley, Melco Resorts & Entertainment Limited (NASDAQ:MLCO) shows a blend of positive trends and challenges. The market has responded well, with a significant return over the last week of 10.03%. This performance aligns with the positive outlook from analysts who anticipate sales growth in the current year and predict the company will be profitable this year, as reflected in the InvestingPro Tips.
The company's aggressive share buyback program and high shareholder yield are key factors that could be driving investor optimism. The data also reveals a substantial revenue growth in the last twelve months as of Q1 2024, standing at 162.09%, which could be a testament to Melco's improving market position.
InvestingPro's real-time metrics provide additional context: Melco's market capitalization is currently at $3.16 billion, with a notable gross profit margin of 36.76% in the last twelve months as of Q1 2024. Despite not paying dividends, the company's focus on shareholder value is evident through other financial strategies.
For investors seeking a deeper dive into Melco's financial health and future prospects, there are additional InvestingPro Tips available. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to comprehensive analyses and insights that could guide investment decisions.
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