MLCO Should I Buy
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Melco Resorts & Entertainment Ltd (MLCO) is a good buy for a beginner investor with a long-term strategy and $50,000-$100,000 available for investment. The stock is currently trading at an attractive valuation, supported by positive analyst sentiment, robust free cash flow expectations in 2026-2027, and strong recovery in Macau's tourism sector. Despite short-term financial challenges, the long-term growth prospects and asset enhancements make it a compelling investment.
The MACD is positive and expanding, indicating bullish momentum. However, the RSI is neutral, and the moving averages are bearish (SMA_200 > SMA_20 > SMA_5), suggesting the stock is still in a broader downtrend. Key support is at 5.351, and resistance is at 6.183. The stock is trading near its pivot point of 5.767, indicating a potential entry opportunity.
Macau's tourism recovery is at historic highs, with record-breaking visitor numbers during the Chinese New Year Golden Week.
UBS upgraded the stock to Buy with a $9.50 price target, citing asset enhancements and robust free cash flow expectations.
The company ranked in the 96th percentile for sustainability in its industry group, reflecting strong ESG leadership.
Concerns over trademark license fee hikes, margin pressure, and market share losses have weighed on the stock, which is down 27% year-to-date.
Financial performance in Q4 2025 showed a significant drop in net income (-399.08% YoY) and EPS (-350.00% YoY), indicating short-term challenges.
In Q4 2025, revenue increased by 8.59% YoY to $1.29 billion, and gross margin improved to 25.17% (+5.23% YoY). However, net income dropped significantly (-399.08% YoY) to $60.64 million, and EPS fell by -350.00% YoY to $0.05, reflecting short-term financial pressures.
Analysts are bullish on MLCO. UBS upgraded the stock to Buy with a $9.50 price target, citing asset enhancements and robust free cash flow in 2026-2027. Citi maintains a Buy rating with a $10.50 price target, highlighting confidence in a rebound in the Philippine market. Texas Capital initiated coverage with a Buy rating and an $11.50 price target, emphasizing the company's unique non-gaming offerings and alignment with Macau's record visitation growth.
