Melco Resorts & Entertainment, the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Karl Choi from Bank of America Securities reiterated a Hold rating on the stock and has a $9.20 price target.
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Karl Choi’s rating is based on a combination of factors that reflect both positive and challenging aspects of Melco Resorts & Entertainment’s financial outlook. The decision to maintain a Hold rating stems from an improved outlook for the Macau gaming sector, which has seen stronger-than-expected growth in recent months. This has led to an increase in Melco’s price objective, as well as a rise in its projected cash earnings and valuation multiples.
However, despite these positive developments, there are still concerns that temper the overall outlook. The company’s elevated gearing profile and the decision to prioritize debt repayment over dividend payments are factors that contribute to the Hold rating. While Melco’s valuation appears fair, supported by strong free cash flow, these constraints suggest a balanced approach, acknowledging both the potential for growth and the existing financial challenges.