Due to the slow market recovery that stems from recent COVID-19 cases in Asia, Melco Resorts & Entertainment (NASDAQ: MLCO) is a mess. The shares of the casino giants are off by 6.63 percent in the past month and 15.69 percent years to date. Still, some analysts remain positive about the Asian casino giant stock.
Bernstein analysts believe that Lawrence Ho’s company is well situated to recover in the world’s largest casino center. The analysts cite additional new room capacity at the Studio City resort as the long-term booster for Melco stock.
“Dark clouds and negative sentiment will surely pass. The long-term structural story for Macau driven by mass and premium mass growth remains very strong, and the catalysts of meaningful recovery are in the foreseeable future.”
Melco also sees value in its shares, last month, the casino giant announced a $500 million buyback plan which applies to Hong Kong and US-listed shares. However, the pace of Macau’s recovery is frustrating. Some gaming equities remain well below the pre-pandemic highs.
Melco stock is also residing 35 percent below the pre-pandemic high. Rival like Wynn Macau is far much removed from 2019 high, indicating that Melco shares still have value play.
Bernstein adds that investors are tired of waiting and that the prevailing situation is similar to 2015 when investors thought that Macau would never recover.
“Over the last few months, investor fatigue has set in. Investors have grown impatient with waiting, and bearish views seem to dominate thinking.”
Analysts target $21.44 Melco’s Nasdaq listed stock which is a 37 upside from the 14th July close. However, Melco’s US stock must more than double to retain its all-time high set in 2018.