UBS upgrades Melco to Buy on valuation after 27% selloff

UBS upgraded Melco Resorts (MLCO) to Buy from Neutral with a price target of $9.50, down from $9.80. The shares is down 27% year-to-date, likely due to concerns over its trademark license fee hike, margin pressure, and market share losses, the analyst tells investors in a research note. Going forward, UBS thinks Melco’s asset enhancements at City of Dream in Macau should enable it to largely offset margin pressures and higher branding fees in 2026. It sees the company posting “robust” free cash flow in 2026 and 2027 as its capital expenditures ease. The shares are trading at an attractive valuation, contends UBS.