Melco Resorts & Entertainment is expected to continue its earnings and revenue growth in 2026 and 2027, driven primarily by strong underlying demand in Macau, according to a recent research note from CBRE.
The brokerage reiterated its ‘Buy’ rating on the company, citing resilient top-line trends and improving fundamentals despite near-term operational headwinds.
In its report, CBRE said it ‘expects continued growth in FY26 and FY27, driven primarily from strong underlying demand in Macau,’ even as the market remains highly competitive. The firm maintained its positive outlook while lowering its price target on Melco shares to $10 from $12.50, indicating near-term cost pressures and recent market volatility.
CBRE noted that Melco’s shares had sold off sharply following concerns over higher operating expenses in the fourth quarter of 2025 and throughout 2026, rising trademark license fees, bad debt provisions linked to a junket settlement, and management’s decision not to pursue a strategic transaction in Manila. These factors weighed on investor sentiment, particularly in a premium- and VIP-led market environment.
The brokerage said the trademark license fee payable to Melco International by Melco Resorts increased to 1.5 percent of gross revenue at City of Dreams Macau from 1 percent beginning in 2026. CBRE estimates that the higher fee will impact EBITDA by about $20 million in FY26.
Despite these challenges, analysts John DeCree and Max Marsh highlighted ‘strong top line trends and fundamental performance in Macau with relatively stable margins’, which they believe should support continued EBITDA growth.
CBRE estimates that Melco’s consolidated adjusted EBITDA will reach approximately $1.35 billion in 2026 and $1.39 billion in 2027, underpinned mainly by its Macau operations.
The brokerage also pointed to deleveraging as a key catalyst for the company over the medium term. As Melco approaches a net leverage ratio of about 4.0 times in fiscal 2026, CBRE said this could open the door for additional share repurchase activity. Investors are also ‘looking forward to dividends being reinstated,’ according to the investment memo.
Melco reported adjusted EBITDA of $299.8 million in the fourth quarter of 2025, slightly below market expectations, partly due to elevated operating expenses linked to major events and marketing initiatives. Management has guided for higher expenses in 2026, particularly around Chinese New Year and new brand campaigns, as it seeks to defend market share.
