MLCO Should I Buy
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Melco Resorts & Entertainment Ltd (MLCO) is not a strong buy at the moment for a beginner investor with a long-term strategy. The technical indicators are mixed, options data shows neutral sentiment, and the financial performance indicates significant challenges. While some analysts see potential upside, the near-term outlook is uncertain, and there are no strong positive catalysts to justify immediate action.
The MACD is positive and expanding, which is a bullish signal, but the RSI is neutral at 46.369. The moving averages are bearish (SMA_200 > SMA_20 > SMA_5), and the stock is trading below the key pivot level of 5.572, indicating potential resistance ahead. Overall, the technical setup is not strongly favorable.
The company's asset enhancements at City of Dreams in Macau are expected to offset margin pressures.
The company's Q4 2025 financials showed a significant drop in net income (-399.08% YoY) and EPS (-350.00% YoY), raising concerns about profitability.
In Q4 2025, revenue increased by 8.59% YoY to $1.29 billion, but net income dropped drastically by -399.08% YoY to $60.64 million. EPS also declined by -350.00% YoY to $0.05. Gross margin improved slightly to 25.17%, up 5.23% YoY, but overall profitability remains a concern.
Analysts are mixed. UBS upgraded the stock to Buy with a $9.50 price target, citing attractive valuation and future cash flow potential. However, Morgan Stanley lowered its price target to $6.30, citing weak near-term growth prospects. Citi maintains a Buy rating with a $10.50 price target, but noted challenges such as bad debt and margin pressures.
