Melco Resorts (MLCO) Soars 0.79% on Strong Macau Revenue

Melco Resorts & Entertainment (MLCO) shares rose to their highest level since February 2024 today, with an intraday gain of 0.79%.

The strategy of buying MLCO shares after they reach a recent high and selling them one week later resulted in a -9.91% return over the past five years. The benchmark return was 56.99%, indicating a significant underperformance of the strategy. The strategy also had a maximum drawdown of -55.11%, highlighting its vulnerability during market downturns. With a Sharpe ratio of -0.09 and a volatility of 46.32%, the strategy carried considerable risk and volatility.

Analysts have been actively revising their price targets for MLCO. Bank of America increased its target from $6.60 to $9.20, citing better-than-anticipated gross gaming revenue in Macau during May-June. Citigroup maintained a "Buy" rating and raised its target from $8.60 to $11.00. Susquehanna, while keeping a "Positive" rating, lowered its target to $9 from $10.

MLCO's financial performance in Q1 2025 was robust, with a notable increase in market share in Macau from 14.7% to 15.7%. Property visitation during May Golden Week surged by 30% year-on-year. EBITDA growth was reported across several properties, with Studio City seeing a 20% quarter-to-quarter increase and City of Dreams Mediterranean showing a 10% year-over-year increase.

The company's liquidity position remains strong, with $3.3 billion available and approximately $1.2 billion in consolidated cash on hand. However, MLCO faces increased operating expenses due to recent events and renovations, including the relaunch of the House of Dancing Water. There is also ongoing uncertainty regarding the strategic review and potential sale of City of Dreams Manila. The competitive environment in the Philippines adds to the challenges, prompting MLCO to review its cost structures and marketing strategies.