Stryker shares tumble despite strong Q2 results and raised guidance
On Monday, BofA Securities analyst Karl Choi increased the price target on Melco Resorts & Entertainment Limited (NASDAQ:MLCO) shares to $6.60, up from the previous $5.70, while maintaining a Neutral rating on the stock.
Choi’s decision to lift the price target by 16% to $6.60 is influenced by the assumption of a higher Macau Gross Gaming Revenue (GGR) market share, which is now expected to reach 15.5% in 2025 compared to the previous estimate of 15%. This revision is based on the year-to-date performance observed, supported by the company’s impressive 14% revenue growth over the last twelve months. Additionally, the analyst anticipates interest savings for Melco Resorts due to lower HIBOR rates.
The valuation of Melco Resorts at 8 times its estimated 2025 EBITDA is considered fair by BofA Securities. With current EBITDA at $1.05 billion and a market capitalization of $2.65 billion, this assessment is based on the company’s strong free cash flow. The analyst noted that Melco Resorts is not expected to pay dividends in the near term as the company is currently focusing on debt repayment, which InvestingPro data confirms.
Choi’s commentary highlighted the company’s financial strategy, "We raise our PO by 16% to US$6.6 as a result of higher Macau GGR market share assumed (at 15.5% in 2025 vs. prior 15% based on YTD performance) as well as interest savings from lower HIBOR. Melco trades at 8x 2025E EBITDA — a valuation that we think is fair given the strong free cash flow but a lack of dividend near term (as the company prioritizes debt repayment)."
Melco Resorts & Entertainment Limited is a developer, owner, and operator of casino gaming and entertainment casino resort facilities primarily in Asia. The company’s new price target reflects a modestly more optimistic outlook on its market position and financial health in the coming years.
In other recent news, Melco Resorts & Entertainment Limited has announced its unaudited financial results for the first quarter of 2025. The report, filed with the Securities and Exchange Commission, did not disclose specific financial figures but indicated that the results pertain to the start of the year. Citi analyst George Choi has upgraded Melco Resorts’ stock rating from Neutral to Buy, setting a new price target of $6.25. Choi projects the company’s first-quarter revenue to be approximately $1,217 million, marking a 9% year-over-year increase. Melco’s adjusted property EBITDA is expected to reach about $309 million, with significant contributions from City of Dreams and Studio City.
In another development, Morgan Stanley (NYSE:MS) also upgraded Melco Resorts’ stock rating from Equalweight to Overweight, although they adjusted the price target to $6.70, down from $7.50. Analysts highlighted Melco’s increased market share in mass gaming revenue and anticipate continued growth bolstered by the reopening of the "House of Dancing Water" show. Furthermore, Melco Resorts has completed a regulatory filing with the SEC, reaffirming its status as a foreign private issuer and its commitment to transparency and compliance with U.S. financial reporting standards. These recent developments reflect Melco Resorts’ strategic moves and anticipated growth in the gaming and hospitality sectors.
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