Morgan Stanley Downgrades Melco Resorts Rating
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 22 2026
0mins
Source: seekingalpha
- Rating Downgrade: Morgan Stanley downgraded Melco Resorts (MLCO) from Overweight to Equal-weight, with analyst Praveen Choudhary highlighting a lack of catalysts and suggesting a reassessment amid a more favorable Macau outlook in the future.
- Dividend Yield Concerns: Melco's unattractive dividend yield profile raises concerns, as any potential payout increase is likely to lag behind peers, which could further undermine investor confidence and the company's appeal.
- Financial Pressures: Elevated gearing and heavy capital expenditures are expected to pressure Melco's attributable free cash flow and EPS, with overall earnings being impacted by weak international operations; Morgan Stanley's adjusted EBITDA estimate for Q2 is below consensus.
- Management Actions Impact: Ongoing corporate actions from Melco's management, such as royalty buybacks and overseas investments, may dilute focus on low trading multiples, leading to a more cautious market perception regarding its valuation.
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Analyst Views on MLCO
Wall Street analysts forecast MLCO stock price to rise
4 Analyst Rating
3 Buy
1 Hold
0 Sell
Strong Buy
Current: 5.230
Low
9.50
Averages
11.21
High
12.55
Current: 5.230
Low
9.50
Averages
11.21
High
12.55
About MLCO
Melco Resorts & Entertainment Ltd is an investment holding company principally engaged in the development and operation of resort facilities. The Company is mainly involved in the provision of casinos, hotel rooms, food and beverage, as well as entertainment, retail and other services. The Company operates casinos under the names of City of Dreams, Studio City, Altira Macau, City of Dreams Manila, City of Dreams Mediterranean and others. The Company also operates electronic gaming machines through Mocha Clubs. In addition, the Company offers hotel management services. The Company operates its business in Asia and Europe.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Macau's June Gaming Revenue Falls 12.1% Year-Over-Year
- Revenue Decline: Macau's gross gaming revenue (GGR) for June fell to 185 billion patacas ($2.29 billion), representing a 12.1% year-over-year decline and an 18% drop from May, indicating a negative impact from the World Cup on tourism and betting trends.
- World Cup Impact: Analyst Anne Ling highlighted that the World Cup, taking place in the U.S., Canada, and Mexico, has compounded typical June seasonality, creating additional headwinds for GGR and weakening premium demand year-over-year.
- First Half Performance: Despite the poor June results, Macau's GGR for the first half of 2026 increased by 6.8% year-over-year to 126.9 billion patacas ($15.7 billion), suggesting potential market recovery.
- Future Outlook: Although monthly comparisons will become more challenging, the second half of the year features a robust event calendar, including K-pop groups and NBA China Games, which may stimulate market demand.
See More
Morgan Stanley Downgrades Melco Resorts Rating
- Rating Downgrade: Morgan Stanley downgraded Melco Resorts (MLCO) from Overweight to Equal-weight, with analyst Praveen Choudhary highlighting a lack of catalysts and suggesting a reassessment amid a more favorable Macau outlook in the future.
- Dividend Yield Concerns: Melco's unattractive dividend yield profile raises concerns, as any potential payout increase is likely to lag behind peers, which could further undermine investor confidence and the company's appeal.
- Financial Pressures: Elevated gearing and heavy capital expenditures are expected to pressure Melco's attributable free cash flow and EPS, with overall earnings being impacted by weak international operations; Morgan Stanley's adjusted EBITDA estimate for Q2 is below consensus.
- Management Actions Impact: Ongoing corporate actions from Melco's management, such as royalty buybacks and overseas investments, may dilute focus on low trading multiples, leading to a more cautious market perception regarding its valuation.
See More
Melco Extends Credit Facility Maturity Date
- Credit Facility Maturity Extension: Melco has extended the maturity date of its HK$15.2375 billion (approximately US$1.94 billion) revolving credit facility from April 29, 2027, to June 9, 2031, ensuring liquidity and financial stability for the company over the next five years.
- Incremental Credit Facility Established: An additional HK$6.438775 billion (approximately US$821.6 million) has been added to the 2020 Credit Facilities, raising total commitments to HK$21.676275 billion (approximately US$2.77 billion), thereby providing stronger financial backing for the company's expansion plans.
- Unchanged Financing Terms: The extension and establishment of the incremental facility are governed by the 2026 Amendment and Restatement Agreement, with key terms such as pricing and financial covenants remaining unchanged, indicating stability in the company's financing costs and financial management.
- Strengthening Banking Relationships: In connection with the amendment, Melco agreed to pay customary fees to consenting lenders and incremental facility lenders, further solidifying its relationships with major financial institutions, which will aid future financing activities.
See More
Asia Bankers Club Expands into Japan Real Estate Market
- Strategic Partnership Initiated: Asia Bankers Club has formed a strategic collaboration with top Japanese developer TAKARA LEBEN, becoming the Global Sole Agent for LEBEN OSAKA UEHOMMACHI PRAISE, marking its official entry into the Japanese real estate market, which is expected to attract significant international investor interest.
- Market Timing Seized: With Japan's diversified economic base, strong tourism, and long-term potential for Yen appreciation, Asia Bankers Club believes now is the optimal time to enter the Japanese market, anticipating stable returns and capital appreciation opportunities for investors.
- Project Advantages Highlighted: The LEBEN OSAKA UEHOMMACHI PRAISE project is strategically located in central Osaka, just two minutes from major transport hubs, with a starting price of approximately USD 360,000, and foreign buyers may access financing of up to 70%, mitigating investment risks.
- Long-term Relationship: This collaboration reflects the longstanding trust between Asia Bankers Club and TAKARA LEBEN, showcasing its professional capabilities in Japan's real estate market, with plans to expand investment opportunities in Tokyo, Kyoto, and other regions.
See More
Macau's May Gaming Revenue Rises 6.7% Year-Over-Year
- Revenue Growth Trend: According to the Gaming Inspection and Coordination Bureau, Macau's gross gaming revenue (GGR) rose 6.7% year-over-year in May to 22.6 billion patacas ($2.80 billion), aligning with analyst expectations and reflecting a 13% sequential increase from April, driven by strong demand during the Labor Day holiday.
- Strong Year-to-Date Performance: For the first five months of 2026, Macau's GGR increased by 10.9% year-over-year to 108.4 billion patacas ($13.4 billion), indicating a sustained market recovery and rising consumer confidence.
- Intensifying Market Competition: Analysts note that monthly comparisons will become more challenging, with Jefferies analyst Anne Ling highlighting that despite these challenges, Wynn Resorts and Galaxy Entertainment are expected to continue gaining market share in the premium segment.
- Industry Outlook: While the overall market shows positive trends, some competitors may struggle with stability or competitiveness, making future market dynamics crucial for the performance of major casino stocks.
See More
Futu Holdings Faces Regulatory Fine
- Futu Holdings Stock Plummets: Futu Holdings shares fell to a 52-week low of $80.50 after China's securities regulator accused the company of operating without licenses in mainland China, proposing a $271 million fine and requiring the shutdown of its mainland apps, which heightened investor concerns over future compliance costs.
- BJ's Wholesale Club Earnings Fail to Boost Stock: Despite BJ's Wholesale Club reporting Q1 revenue and earnings above analyst estimates, its stock dropped 8.3% due to slowing core merchandise demand and margin pressure, indicating a lack of confidence in the company's growth prospects.
- Melco Resorts Faces Profitability Challenges: Melco Resorts' stock hit new lows as Q1 earnings of $0.07 per share missed the $0.09 consensus estimate, raising investor concerns about high labor and marketing costs amid fierce competition in Macau's casino market.
- Overall Market Sentiment Shifts: Futu and Melco stocks have plunged 45% and 29% respectively, while BJ's stock has decreased by 3%, reflecting a significant decline in investor confidence in these companies amid regulatory and operational challenges.
See More
Macau's June Gaming Revenue Falls 12.1% Year-Over-Year
- Revenue Decline: Macau's gross gaming revenue (GGR) for June fell to 185 billion patacas ($2.29 billion), representing a 12.1% year-over-year decline and an 18% drop from May, indicating a negative impact from the World Cup on tourism and betting trends.
- World Cup Impact: Analyst Anne Ling highlighted that the World Cup, taking place in the U.S., Canada, and Mexico, has compounded typical June seasonality, creating additional headwinds for GGR and weakening premium demand year-over-year.
- First Half Performance: Despite the poor June results, Macau's GGR for the first half of 2026 increased by 6.8% year-over-year to 126.9 billion patacas ($15.7 billion), suggesting potential market recovery.
- Future Outlook: Although monthly comparisons will become more challenging, the second half of the year features a robust event calendar, including K-pop groups and NBA China Games, which may stimulate market demand.
See More
Morgan Stanley Downgrades Melco Resorts Rating
- Rating Downgrade: Morgan Stanley downgraded Melco Resorts (MLCO) from Overweight to Equal-weight, with analyst Praveen Choudhary highlighting a lack of catalysts and suggesting a reassessment amid a more favorable Macau outlook in the future.
- Dividend Yield Concerns: Melco's unattractive dividend yield profile raises concerns, as any potential payout increase is likely to lag behind peers, which could further undermine investor confidence and the company's appeal.
- Financial Pressures: Elevated gearing and heavy capital expenditures are expected to pressure Melco's attributable free cash flow and EPS, with overall earnings being impacted by weak international operations; Morgan Stanley's adjusted EBITDA estimate for Q2 is below consensus.
- Management Actions Impact: Ongoing corporate actions from Melco's management, such as royalty buybacks and overseas investments, may dilute focus on low trading multiples, leading to a more cautious market perception regarding its valuation.
See More
Melco Extends Credit Facility Maturity Date
- Credit Facility Maturity Extension: Melco has extended the maturity date of its HK$15.2375 billion (approximately US$1.94 billion) revolving credit facility from April 29, 2027, to June 9, 2031, ensuring liquidity and financial stability for the company over the next five years.
- Incremental Credit Facility Established: An additional HK$6.438775 billion (approximately US$821.6 million) has been added to the 2020 Credit Facilities, raising total commitments to HK$21.676275 billion (approximately US$2.77 billion), thereby providing stronger financial backing for the company's expansion plans.
- Unchanged Financing Terms: The extension and establishment of the incremental facility are governed by the 2026 Amendment and Restatement Agreement, with key terms such as pricing and financial covenants remaining unchanged, indicating stability in the company's financing costs and financial management.
- Strengthening Banking Relationships: In connection with the amendment, Melco agreed to pay customary fees to consenting lenders and incremental facility lenders, further solidifying its relationships with major financial institutions, which will aid future financing activities.
See More
Asia Bankers Club Expands into Japan Real Estate Market
- Strategic Partnership Initiated: Asia Bankers Club has formed a strategic collaboration with top Japanese developer TAKARA LEBEN, becoming the Global Sole Agent for LEBEN OSAKA UEHOMMACHI PRAISE, marking its official entry into the Japanese real estate market, which is expected to attract significant international investor interest.
- Market Timing Seized: With Japan's diversified economic base, strong tourism, and long-term potential for Yen appreciation, Asia Bankers Club believes now is the optimal time to enter the Japanese market, anticipating stable returns and capital appreciation opportunities for investors.
- Project Advantages Highlighted: The LEBEN OSAKA UEHOMMACHI PRAISE project is strategically located in central Osaka, just two minutes from major transport hubs, with a starting price of approximately USD 360,000, and foreign buyers may access financing of up to 70%, mitigating investment risks.
- Long-term Relationship: This collaboration reflects the longstanding trust between Asia Bankers Club and TAKARA LEBEN, showcasing its professional capabilities in Japan's real estate market, with plans to expand investment opportunities in Tokyo, Kyoto, and other regions.
See More
Macau's May Gaming Revenue Rises 6.7% Year-Over-Year
- Revenue Growth Trend: According to the Gaming Inspection and Coordination Bureau, Macau's gross gaming revenue (GGR) rose 6.7% year-over-year in May to 22.6 billion patacas ($2.80 billion), aligning with analyst expectations and reflecting a 13% sequential increase from April, driven by strong demand during the Labor Day holiday.
- Strong Year-to-Date Performance: For the first five months of 2026, Macau's GGR increased by 10.9% year-over-year to 108.4 billion patacas ($13.4 billion), indicating a sustained market recovery and rising consumer confidence.
- Intensifying Market Competition: Analysts note that monthly comparisons will become more challenging, with Jefferies analyst Anne Ling highlighting that despite these challenges, Wynn Resorts and Galaxy Entertainment are expected to continue gaining market share in the premium segment.
- Industry Outlook: While the overall market shows positive trends, some competitors may struggle with stability or competitiveness, making future market dynamics crucial for the performance of major casino stocks.
See More
Futu Holdings Faces Regulatory Fine
- Futu Holdings Stock Plummets: Futu Holdings shares fell to a 52-week low of $80.50 after China's securities regulator accused the company of operating without licenses in mainland China, proposing a $271 million fine and requiring the shutdown of its mainland apps, which heightened investor concerns over future compliance costs.
- BJ's Wholesale Club Earnings Fail to Boost Stock: Despite BJ's Wholesale Club reporting Q1 revenue and earnings above analyst estimates, its stock dropped 8.3% due to slowing core merchandise demand and margin pressure, indicating a lack of confidence in the company's growth prospects.
- Melco Resorts Faces Profitability Challenges: Melco Resorts' stock hit new lows as Q1 earnings of $0.07 per share missed the $0.09 consensus estimate, raising investor concerns about high labor and marketing costs amid fierce competition in Macau's casino market.
- Overall Market Sentiment Shifts: Futu and Melco stocks have plunged 45% and 29% respectively, while BJ's stock has decreased by 3%, reflecting a significant decline in investor confidence in these companies amid regulatory and operational challenges.
See More
