Texas Capital cools on Melco Resorts amid Macau pressures
Texas Capital Securities lowered its rating on Melco Resorts & Entertainment (MLCO) to Hold from Buy.
Analyst David Bain cited several reasons for the downgrade, including a strong variance between the firm's EBITDA estimates and consensus expectations. The firm also warned on lower Macau gross gaming revenue visibility in a prolonged period of heightened promotions.
"We could potentially become more constructive following a rationalization, in our view, of consensus estimates, and Macau GGR stabilization, particularly given our positive view of MLCO’s management and product offering," noted Bain.
Texas Capital cut its price target on Melco Resorts (MLCO) to $5.50 per share based on a lower target multiple of Macau EBITDA. "While a $5.50 PT potentially represents wider equity percentage upside than most hold rated names, we note current strong stock and industry volatility," added Bain.
Shares of Melco Resorts (MLCO) are down more than 10% over the last six weeks.
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