Melco Resorts & Entertainment Ltd. (MLCO, Financial) posted a revenue of $1.23 billion for the first quarter, surpassing last year's $1.11 billion. The company's Macau properties demonstrated robust performance with a 32% rise in EBITDA compared to the previous quarter. This was attributed to a consistent increase in mass drop each month, reaching a record high in daily mass drop figures.
The firm attributes its business momentum to the concerted efforts of its teams and the high quality of its product offerings. However, City of Dreams Manila faced challenges due to heightened competition in the market. Meanwhile, City of Dreams Mediterranean and Melco's satellite casinos in Cyprus achieved commendable sequential and year-over-year growth, despite regional conflicts.
Additionally, the development of the casino at City of Dreams Sri Lanka is progressing as planned, with operations slated to begin in the third quarter of 2025.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 12 analysts, the average target price for Melco Resorts and Entertainment Ltd (MLCO, Financial) is $6.58 with a high estimate of $8.10 and a low estimate of $4.60. The average target implies an upside of 16.65% from the current price of $5.64. More detailed estimate data can be found on the Melco Resorts and Entertainment Ltd (MLCO) Forecast page.
Based on the consensus recommendation from 13 brokerage firms, Melco Resorts and Entertainment Ltd's (MLCO, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Melco Resorts and Entertainment Ltd (MLCO, Financial) in one year is $16.19, suggesting a upside of 187.06% from the current price of $5.64. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Melco Resorts and Entertainment Ltd (MLCO) Summary page.
MLCO Key Business Developments
Release Date: February 27, 2025
- Adjusted Property EBITDA: Approximately $295 million for Q4 2024.
- Adjusted Property EBITDA (VIP Hold Adjusted): Approximately $312 million, 5% higher than Q3 2024.
- Operating Expenses (OpEx) in Macau: Increased to $3.2 million per day during Q4 2024.
- Liquidity Position: Available liquidity of $3.3 billion, with consolidated cash on hand of approximately $1.3 billion.
- Debt Maturities: Approximately $1.2 billion of debt due in 2025, covered by available liquidity.
- Corporate Expense: $25 million in Q4 2024, primarily due to trademark license fees.
- Share Repurchase: $20 million in MLCO shares repurchased since Q3 2024.
- Depreciation and Amortization Guidance for Q1 2025: Expected to be approximately $135 million to $140 million.
- Corporate Expense Guidance for Q1 2025: Expected to be approximately $25 million to $30 million.
- Net Interest Expense Guidance for Q1 2025: Expected to be approximately $100 million to $125 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Melco Resorts and Entertainment Ltd (MLCO, Financial) reported a strong start to 2025, with market share growth continuing from the fourth quarter of 2024.
- Property visitation exceeded pre-pandemic levels, with a 17% increase compared to the previous year during the Chinese New Year period.
- The company is investing in enhancing customer experience and infrastructure, such as the revamp of the high limit area at Studio City and renovations at City of Dreams.
- Melco Resorts and Entertainment Ltd (MLCO) has a strong liquidity position with $3.3 billion in available liquidity and $1.3 billion in consolidated cash on hand.
- The company is exploring strategic alternatives for City of Dreams Manila, aiming to enhance financial flexibility and support long-term growth initiatives.
Negative Points
- Operating expenses in Macau increased to $3.2 million per day during Q4 2024, partly due to new activations and additional programming.
- The company faces $1.2 billion of debt maturing in 2025, although it is covered by available liquidity.
- Melco Resorts and Entertainment Ltd (MLCO) noted that the Chinese New Year trends were not as strong as anticipated, with choppy GGR in early 2025.
- The company is experiencing challenges in Cyprus, despite solid results from City of Dreams Mediterranean and satellite casinos.
- Melco Resorts and Entertainment Ltd (MLCO) is implementing a trademark licensing fee for the first time, which adds to corporate expenses.
