Investment bank Morgan Stanley said in a Monday note that it expects the share price of Macau’s Melco Resorts & Entertainment to rise in absolute terms over the next 60 days, bolstered by positive prospects unveiled following the company’s recent 4Q24 earnings release.
According to analysts Praveen Choudhary and Gareth Leung, there are multiple catalysts that should help Melco’s share price in 2025, including continued market share improvement thanks in part to the upcoming return of residency show House of Dancing Water in May after a five-year absence.
Melco’s newly unveiled asset light strategy, which could see it offload City of Dreams Manila – possibly in favor of an operator-only model – is also seen as a pathway to deleveraging, while the analysts believe consensus revisions have already bottomed out.
“We think the current valuation with our new price target on 2025 FCFE [free cash flow to equity] offering 20% upside looks attractive, with further upside risk if the market values the stock on 2026 FCFE, as more benefits of deleveraging materialize,” they wrote.
“We estimate that there is about an 80%+ probability for the scenario.”
Melco told investors last week that it has already seen a Macau market share gain during the first two months of 2025 relative to 4Q24 levels, when mass share reached 13.9%.
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