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Melco Resorts & Entertainment is set for continued earnings and revenue gains in 2026 and 2027, fueled by solid Macau demand, according to a fresh note from CBRE. The brokerage stuck to its ‘Buy’ rating on the stock, highlighting resilient top-line momentum and improving market basics despite short-term cost hurdles. While trimming its price target to $10 from $12.50 to account for volatility and pressures, CBRE sees Melco well-placed to grow EBITDA through the period.
Macau Demand Powers FY26-FY27 Projections
CBRE expects Melco’s growth to stem mainly from Macau’s underlying strength, even in a highly competitive landscape. The firm projects consolidated adjusted EBITDA of about $1.35 billion in FY26 and $1.39 billion in FY27, largely driven by the company’s Macau footprint. Analysts John DeCree and Max Marsh pointed to strong revenue trends and stable margins as anchors, offsetting near-term operational drags.
Macau’s recovery has favored operators like Melco with premium mass and non-gaming draws, helping it hold ground amid jostling for share. CBRE’s outlook assumes steady demand supports incremental gains, with Melco’s Cotai properties pulling the weight as the market settles into a post-boom phase.
Cost Pressures and Recent Sell-Off
Melco shares dipped after 4Q25 results showed higher operating expenses, tied to events, marketing, and other pushes. Management flagged elevated spending into 2026, especially around Chinese New Year and new campaigns aimed at defending position. Additional hits include rising trademark license fees to Melco International, up to 1.5 percent of gross revenue at City of Dreams Macau from 1 percent starting this year, plus bad debt from a junket settlement and no Manila strategic deal.
CBRE pegs the fee hike’s EBITDA drag at around $20 million for FY26. Those factors sparked investor caution in a VIP- and premium-heavy environment, but the brokerage views them as manageable against Melco’s operational base.
Deleveraging Opens Door for Buybacks and Dividends
Lower leverage emerges as a medium-term tailwind. CBRE forecasts Melco nearing a net leverage ratio of 4.0 times in FY26, potentially unlocking more share repurchases. Investors also eye dividend reinstatement as debt eases. The combination of EBITDA growth and balance sheet repair positions Melco for capital returns, a draw in a cyclical sector.
4Q25 adjusted EBITDA came in at $299.8 million, shy of expectations due to expense spikes. Yet CBRE’s ‘Buy’ stance rests on Macau fundamentals outweighing those blips, with demand trends favoring Melco’s mix of gaming and entertainment.
Competitive Macau Keeps Margins in Check
Macau stays fiercely contested, but Melco’s stability shines through. CBRE trimmed its target to reflect costs and volatility, yet holds that top-line resilience and margins will drive gains. FY26–27 EBITDA estimates hinge on Macau carrying the load, with deleveraging adding optionality for shareholder-friendly moves.
Management’s 2026 expense guidance signals no easing on marketing or events, underscoring the fight for share. Still, CBRE bets on demand holding firm enough to lift results, keeping Melco on a growth path amid peers chasing similar dynamics.
Source: Asia Gaming Brief (AGB)
