Analysts Expect Upside in Melco Resorts (MLCO) Despite Gaming Revenue Growth Slowdown

Melco Resorts & Entertainment Limited (NASDAQ:MLCO) is one of the 10 Cheap Stocks with Huge Upside Potential. Texas Capital initiated coverage of Melco Resorts & Entertainment Limited (NASDAQ:MLCO) stock on January 22 with a Buy rating and a $11.5 price target. Analysts believe the company’s unique non-gaming offerings are a key factor in its growth story, with the Macau market gross gaming revenue closing in on 2019 levels.

In contrast to Texas Capital, on January 15, the stock was downgraded by JPMorgan from Overweight to Hold. JPMorgan analyst DS Kim lowered the firm’s price target from $11 to $7.7, suggesting a further 25.61% upside from the current levels. The firm noted that it is taking a more selective approach in the short term toward Macau gaming stocks. For the company specifically, JPMorgan sees downside risk to consensus estimates. The firm also noted the lack of dividend support. In a research note to investors, analysts added that Melco Resorts’ margins demonstrate clear and sustained improvement, and the stock remains in ‘show-me’ territory for investors.

Bank of America analyst Karl Choi also reduced the price target for the stock from $9.5 to $7.9 on January 13 and reaffirmed his Hold rating. The adjusted price target offers a further 28.87% upside from the current levels. The analyst said the target price revision reflects a more selective view of Macau gaming stocks ahead of an expected slowdown in gross gaming revenue growth in 2026.

Melco Resorts & Entertainment Limited (NASDAQ:MLCO) operates as a developer, owner, and operator of casino gaming and resort facilities in Europe and Asia. The company operates and owns City of Dreams, restaurants and bars, suites and villas, retail outlets, recreation and leisure facilities, and a wet stage performance theater. It was founded in 2004 and is headquartered in Central, Hong Kong.

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Disclosure: None. This article is originally published at Insider Monkey.