{"id":211510,"date":"2022-04-30T12:51:14","date_gmt":"2022-04-30T19:51:14","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=211510"},"modified":"2022-04-30T17:52:15","modified_gmt":"2022-05-01T00:52:15","slug":"melco-should-buy-studio-city-merge-with-parent-say-analysts","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/melco-should-buy-studio-city-merge-with-parent-say-analysts\/","title":{"rendered":"Melco Could Boost Share Price with Studio City Acquisition, Parent Merger"},"content":{"rendered":"

Analysts believe Melco Resorts & Entertainment (NASDAQ:MLCO) could prop up its sagging share price by acquiring Studio City International Holdings (NYSE:MSC) and then merging with parent Melco International Development.<\/p>\n

\"Lawrence
Melco Resorts CEO Lawrence Ho in a 2015 interview in Macau. Bernstein says the company should buy Studio City. (Image: Bloomberg<\/em>)<\/figcaption><\/figure>\n

That take comes courtesy of Bernstein analysts Vitaly Umansky and Louis Li. In a recent research report, they note that the aforementioned transactions would unlock shareholder value while potentially steering the gaming company clear of losing its Nasdaq listing<\/a>.<\/p>\n

\n

Shares of Melco are off almost 44% year-to-date and 70.35% over the past year. Those performances are significantly worse than those of rivals Las Vegas Sands (NYSE:LVS) and Wynn Resorts — the other two US-listed Macau concessionaires.<\/p>\n<\/div>\n

Bernstein rates Melco \u201coutperform,\u201d with a price target of $12.20, which is more than double the stock\u2019s Friday closing price of $5.72. However, the research firm adds that if Lawrence Ho\u2019s company completes the two aforementioned deals, the share price could jump to $15.<\/p>\n

Good Reasons to Consider the Deals<\/h2>\n

Beyond creating shareholder value, Melco, though it hasn\u2019t signaled it\u2019s looking at the deals, has compelling reasons to consider buying out Studio City and merging with its international parent.<\/p>\n

The City of Dreams operator already owns 55% of Studio City, which has also been mentioned by US regulators as a possible candidate for losing its New York listing<\/a>. Not only would Melco streamline its capital structure with that acquisition, it\u2019d likely be getting a good deal, as Studio City shares are down 71.44% over the past year.<\/p>\n

Such a transaction would lead to re-rating in Melco valuation (via increase in Studio City multiple and earnings before interest, taxes, depreciation and amortization (EBITDA) enhancement) and add over US$2 of shareholder value to our price target,\u201d<\/strong> note the Bernstein analysts.<\/p><\/blockquote>\n

Acquiring Studio City would also clarify that company\u2019s ownership structure. That\u2019s relevant because it\u2019s currently considered a satellite casino operator, and under Macau\u2019s new gaming laws, all satellite casinos must be owned by traditional concessionaires within the next three years.<\/p>\n

By merging with Melco International, which already owns almost 56% of the gaming entity, Melco Resorts potentially eliminates delisting risk. That’s while possibly broadening its investor base, adds Bernstein.<\/p>\n

Avoiding Delisting Could De-Risk Melco Resorts Stock<\/h2>\n

Delisting fears are popping up following passage of the Holding Foreign Companies Accountable Act (HFCAA) and ongoing geopolitical tensions between the US and China.<\/p>\n

In fairness to Melco and Studio City, they\u2019re joined by a slew of other Chinese companies trading in New York that could draw the ire of US regulators.<\/p>\n

At issue for the gaming company is that the aforementioned HFCAA mandates that audits of foreign companies trading in the US be inspected by the US Public Company Accounting Standards Board (PCAOB). However, the PCAOB says it cannot evaluate Melco\u2019s audits, which are conducted by Ernst & Young, in Hong Kong \u2014 the gaming company\u2019s headquarters.<\/strong><\/p>\n

Bernstein previously said the casino operator has options<\/a>, including listing in Hong Kong. The shares previously traded there. But that listing was abandoned in 2015, with Ho noting investors were partial to the company\u2019s Nasdaq-listed stock.<\/p>\n

Melco hasn\u2019t publicly commented on buying Studio City or merging with its parent company. But it\u2019s clear Bernstein sees positives in both potential transactions.<\/p>\n","protected":false},"excerpt":{"rendered":"

Analysts believe Melco Resorts & Entertainment (NASDAQ:MLCO) could prop up its sagging share price by acquiring Studio City International Holdings (NYSE:MSC) and then merging with parent Melco International Development. That take comes courtesy of Bernstein analysts Vitaly Umansky and Louis Li. In a recent research report, they note that the aforementioned transactions would unlock shareholder […]<\/p>\n","protected":false},"author":46,"featured_media":211511,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[69069,32093],"tags":[],"acf":[],"yoast_head":"\nMelco Should Buy Studio City, Merge With Parent, Say Analysts<\/title>\n<meta name=\"description\" content=\"Melco could benefit from buying Studio City, merging with Melco International, according to analysts.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.casino.org\/news\/melco-should-buy-studio-city-merge-with-parent-say-analysts\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Melco Should Buy Studio City, Merge With Parent, Say Analysts\" \/>\n<meta property=\"og:description\" content=\"Melco could benefit from buying Studio City, merging with Melco International, according to analysts.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/melco-should-buy-studio-city-merge-with-parent-say-analysts\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2022-04-30T19:51:14+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-05-01T00:52:15+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/04\/ho.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"801\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Todd Shriber\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@etfgodfather\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Todd Shriber\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/melco-should-buy-studio-city-merge-with-parent-say-analysts\/\",\"url\":\"https:\/\/www.casino.org\/news\/melco-should-buy-studio-city-merge-with-parent-say-analysts\/\",\"name\":\"Melco Should Buy Studio City, Merge With Parent, Say Analysts\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/melco-should-buy-studio-city-merge-with-parent-say-analysts\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/melco-should-buy-studio-city-merge-with-parent-say-analysts\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/04\/ho.jpg\",\"datePublished\":\"2022-04-30T19:51:14+00:00\",\"dateModified\":\"2022-05-01T00:52:15+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/f4cecf70a5032bc4e60eb73fc86d4a85\"},\"description\":\"Melco could benefit from buying Studio City, merging with Melco International, according to analysts.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/melco-should-buy-studio-city-merge-with-parent-say-analysts\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/melco-should-buy-studio-city-merge-with-parent-say-analysts\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/melco-should-buy-studio-city-merge-with-parent-say-analysts\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/04\/ho.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2022\/04\/ho.jpg\",\"width\":1200,\"height\":801,\"caption\":\"Melco Resorts CEO Lawrence Ho in a 2015 interview in Macau. 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