MLCO Should I Buy
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Melco Resorts & Entertainment Ltd (MLCO) is not an immediate buy for a beginner investor with a long-term focus. While the stock shows potential for recovery in the long term due to positive developments in Macau's gaming sector and analysts' optimistic ratings, the current financial performance and technical indicators do not strongly support an immediate entry point. The investor may consider waiting for more favorable conditions or further clarity on the company's margin pressures and market share recovery.
The stock's MACD is slightly positive at 0.046, indicating mild bullish momentum, but it is contracting, which suggests weakening strength. RSI is neutral at 36.037, showing no clear overbought or oversold conditions. The stock is trading near its support level (S1: 5.697), but pre-market price movement (-0.17%) indicates slight bearish sentiment. Converging moving averages further suggest indecision in the market.
Macau's gross gaming revenue (GGR) increased by 13.9% YoY in the first two months of 2026, with strong holiday and tourism-driven growth.
Analysts from UBS and Texas Capital have upgraded the stock to 'Buy,' citing attractive valuation, asset enhancements, and robust free cash flow potential in 2026-
The company's gross margin improved by 5.23% YoY in Q4 2025, indicating operational efficiency.
Concerns over trademark license fee hikes, margin pressures, and market share losses have weighed on the stock, leading to a 27% YTD decline.
Q4 2025 financials show a significant drop in net income (-399.08% YoY) and EPS (-350.00% YoY), raising concerns about profitability.
Pre-market price decline (-0.17%) and lack of significant hedge fund or insider trading activity indicate limited short-term momentum.
In Q4 2025, revenue grew by 8.59% YoY to $1.29 billion, reflecting strong top-line growth. However, net income dropped significantly by -399.08% YoY to $60.64 million, and EPS fell by -350.00% YoY to $0.05, signaling profitability challenges. Gross margin improved to 25.17%, up 5.23% YoY, showcasing some operational improvements.
Analysts are optimistic about MLCO's long-term prospects. UBS upgraded the stock to 'Buy' with a $9.50 price target, citing attractive valuation and asset enhancements. Citi maintained a 'Buy' rating but lowered the price target to $10.50 due to concerns about bad debt and strategic decisions. Texas Capital initiated coverage with a 'Buy' rating and an $11.50 price target, highlighting the company's unique offerings and alignment with Macau's record visitation.
