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The firm’s analysts said MLCO has an undemanding valuation, and they see a likely positive second quarter earnings surprise on the way.
The MLCO share price is up over 2% at the time of writing.
“With a better-than-expected recovery in 1H23, we note four positive key structural trends and are turning more constructive on the sector: (1) a supportive government; (2) increasing per-player value; (3) successful non-gaming events so far; and (4) an early recovery sign in the VIP segment,” wrote the analysts.
“The GGR QTD beat expectation, with the mass GGR at ~90% of FY19’s level (1Q23: 67%). The VIP segment also pleasantly surprised, at 25% of FY19’s level (1Q23: 15%). By segment, MLCO should gain 2% mass share, while Wynn/SJM each ~1% VIP share,” they added.
Credit Suisse lifted its 2023/24/25E GGR for MLCO to 66%/87%/99% of 2019’s level and estimates the sector 2024 EBITDA at 101% of 2019’s level.
In addition, they see catalysts such as a stronger-than-expected June GGR, an earnings upgrade ahead of the 2Q results, the summer holidays, and potential China’s policy stimulus on consumption ahead.
“Shorter term, MLCO should offer the most positive earnings surprise in 2Q23,” the analysts concluded.
