Texas Capital downgrades Melco Resorts to hold over Macau GGR visibility
Broker cites weaker EBITDA outlook and intensified premium-mass promotional competition
Key Takeaways
- Texas Capital Securities downgraded Melco Resorts & Entertainment Ltd to “hold” from “buy” due to weaker visibility on Macau GGR and intensified premium-mass competition.
- The broker projects adjusted EBITDA of US$261.2m and US$280.6m for Q3 and Q4 2026, respectively, both below consensus.
- For 2026 Texas Capital forecasts adjusted EBITDA of US$1.27bn on net revenue near US$4.90bn, an 11% and 5% decline year-on-year respectively.
- Texas Capital revised Macau’s October GGR to a 4% year-on-year contraction and highlighted heightened promotional competition among the six Macau concessionaires.
Texas Capital Securities downgraded Melco Resorts & Entertainment Ltd to “hold” from “buy” in a report published Friday, citing reduced visibility on Macau gross gaming revenue (GGR) trends and intensified competition for premium-mass players. Analyst David Bain said the broker’s forecasts for Melco’s reported earnings in Q3 and Q4 2026 are “significantly” below market consensus.
Details of the downgrade and key figures
Texas Capital estimated that Melco Resorts’ adjusted EBITDA would be 14% and 12% below consensus for Q3 and Q4 2026, respectively. The broker projects adjusted EBITDA of US$261.2 million for Q3 and US$280.6 million for Q4 2026.
For full-year 2026, Texas Capital expects adjusted EBITDA of US$1.27 billion, an 11% year-on-year decline, on net revenue of nearly US$4.90 billion, down about 5%.
GGR forecast revision and market context
Texas Capital downgraded its Macau GGR forecast for October to a 4% year-on-year contraction from a prior expectation of flat performance. UBS said in a recent memo that analyst consensus for October GGR was “challenging.”
Bain noted that Macau’s September GGR recorded its lowest daily average since January 2025, and industry checks in mid-October did not show a meaningful year-on-year improvement in demand. He also highlighted that Q4 2026 faces tough comparables after 15% year-on-year GGR growth in the same period of 2025.
“We believe China macro, including prolonged deflationary pressures, sticky property market weakness and lower employment have had an impact” — David Bain, Texas Capital Securities
Texas Capital also pointed to China’s 20% tax on offshore trust assets introduced in July 2026, which it said prompted restructurings and some capital liquidation.
Promotional competition and player behaviour
The broker highlighted persistent promotional competition among Macau’s six concessionaires, particularly in the premium-mass segment, and said the rise in visitors from mainland China has not translated into an equivalent recovery in higher-value customer spend. Bain added that industry checks indicated one of the six concessionaires had recently stepped up promotional spending, implying elevated player reinvestment levels.
Melco balance sheet and outlook
Despite the downgrade, Texas Capital retained a positive long-term view on Melco Resorts’ management and product offering. “We believe heightened player reinvestment levels are not permanent and give way to a longer-term trend of competition based on product and service, benefiting Melco Resorts,” Bain wrote, adding he expects Melco to gain market share in Macau in 2027 supported by property improvements.
Melco Resorts & Entertainment Ltd operates City of Dreams, Studio City and Altira Macau, plus Mocha Club electronic gaming rooms in Macau; outside Macau it runs City of Dreams Manila, City of Dreams Mediterranean and gaming operations at City of Dreams Sri Lanka. For tracking market variations see reports on [Macau GGR](/news) and coverage of [Melco Resorts](/casino).
Frequently Asked Questions
Why did Texas Capital downgrade Melco Resorts?
Texas Capital downgraded Melco Resorts to “hold” because of reduced visibility on Macau GGR and intensified promotional competition in the premium-mass segment; its analyst said the broker’s EBITDA forecasts for Q3 and Q4 2026 sit significantly below consensus.
What EBITDA does Texas Capital forecast for 2026?
Texas Capital projects adjusted EBITDA of US$1.27 billion for 2026, about an 11% decline year-on-year, with net revenue near US$4.90 billion, down roughly 5%.
How did Texas Capital change its October Macau GGR forecast?
The broker revised its October Macau GGR forecast to a 4% year-on-year decline from a prior view of flat performance; UBS described analyst consensus for October as “challenging.”
What role does promotional competition play in the view on Macau?
The report says promotional competition among Macau’s six concessionaires has intensified—especially in premium-mass—raising player reinvestment levels and limiting recovery in high-value customer spend despite more mainland China visitors.
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Emilio Navarro
Industry Technology Correspondent
Emilio Navarro covers the cross-cutting technology and business of iGaming — platforms, data and AI, compliance tooling, affiliate marketing, financial results, and the stories that fit no single rubric. The reports open with the announcement, cite vendors and figures exactly as published, and keep a healthy distance from press-release language. When a supplier unveils a new engine or the advertising rulebook changes, Emilio Navarro reports what genuinely changes.
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