Credit Suisse upgraded shares of Melco Resorts & Entertainment (NASDAQ:) to Outperform from Neutral, elevating the worth goal to $18.20 from $14 in a observe Tuesday.

The agency’s analysts stated MLCO has an undemanding valuation, they usually see a possible constructive second quarter earnings shock on the way in which.

The MLCO share worth is up over 2% on 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 stage and estimates the sector 2024 EBITDA at 101% of 2019’s stage.

In addition, they see catalysts resembling a stronger-than-expected June GGR, an earnings improve forward of the 2Q outcomes, the summer season holidays, and potential China’s coverage stimulus on consumption forward.

“Shorter term, MLCO should offer the most positive earnings surprise in 2Q23,” the analysts concluded.