Melco Resorts Stock Hits New Peak Amid Mixed Earnings Results

Shares of Melco Resorts & Entertainment have surged to a fresh 52-week high, climbing an impressive 44% since the start of the year. However, this substantial price appreciation masks a complex quarterly report that presented a tale of two halves: revenue significantly outpaced projections, while earnings per share delivered a substantial disappointment. This divergence raises questions about a potential inflection point for the gaming giant.

Profitability Concerns Overshadow Revenue Strength

The company’s second-quarter 2025 performance was highlighted by a remarkable revenue surge. Melco generated $1.33 billion, which not only surpassed analyst forecasts by a notable 7.26% but also represented a 15% year-over-year increase. The driving force behind this top-line success was unequivocally its Macau operations. Properties including City of Dreams Macau and Studio City reported record-breaking results in mass-market table games, propelling the adjusted property EBITDA upward by 35%.

Yet, this celebratory revenue news was tempered by a significant shortfall on the bottom line. The adjusted earnings per share landed at just $0.04, falling a stark 55.56% below the anticipated $0.09. This pronounced weakness in profitability, despite robust sales growth, is prompting a closer examination of the company’s earnings quality and cost structure.

Strategic Pivot and International Growth Initiatives

Concurrently, Melco is pursuing a dual path of international expansion and a strategic overhaul. The August 1, 2025, launch of City of Dreams Sri Lanka marks the company’s entry into a new geographic market and serves as a testing ground for an innovative “asset-light” operational model. This approach, which involves forming partnerships with established local firms, is designed to minimize debt, limit capital expenditure, and capture growth in emerging markets without over-leveraging the company’s own balance sheet.

Should investors sell immediately? Or is it worth buying Melco Resorts, Entertainment?

Sustained Analyst Confidence Despite Earnings Miss

Market experts have maintained a largely optimistic outlook on Melco’s prospects in spite of the mixed quarterly figures. The prevailing consensus recommendation continues to hover between “Moderate Buy” and “Buy,” accompanied by price targets ranging from $8.50 to $12.75. Goldman Sachs recently reaffirmed its “Buy” rating, simultaneously raising its target to $9.00. Susquehanna expressed even greater optimism, boosting its target from $10.00 to $12.00.

The consensus 12-month price target has been revised upward to an average of $10.35, indicating a 17.41% increase from prior estimates. This positive sentiment is already reflected in the market, with the stock trading near its 52-week high of €7.85.

The critical question remains whether Melco can rectify its profitability challenges and live up to the high expectations set by analysts. Its ongoing expansion into new territories and the continued strength of its Macau business provide a foundation for optimism, but conclusive evidence of a successful turnaround has yet to materialize.