UBS Upgrades Sands, Melco to Buy Despite Cutting Price Targets

Edgen Stock

·Mar 09 2026, 03:07

Share to

Share to

Copy link

Key Takeaways

UBS issued a research report expressing confidence in Macau's gaming sector but sent a mixed signal to investors by upgrading two major casino operators while simultaneously lowering their valuation targets. The bank holds a positive long-term outlook, expecting solid demand to drive sustainable revenue growth through 2026.

Conflicting Signals: UBS upgraded Sands China and Melco International Development to 'Buy' from 'Neutral' but cut their respective price targets to $20.4 and $5.3.
Stable Market Forecast: The bank maintained its forecast for Macau's Gross Gaming Revenue (GGR) to grow 5% year-over-year in 2026.
Sector Top Picks: Melco Resorts & Entertainment (MLCO.US) and Sands China (01928.HK) were named as UBS's preferred investments in the sector.

UBS Upgrades Two Casinos But Slashes Price Targets

UBS analysts upgraded both Sands China Ltd. (01928.HK) and Melco International Development (00200.HK) to 'Buy' from a previous 'Neutral' rating, signaling renewed confidence in their operational prospects. However, this positive revision was paired with a reduction in their valuation estimates. The target price for Sands China was cut to $20.4, and Melco International's was lowered to $5.3.

This paradoxical move suggests that while UBS sees fundamental strength and a favorable entry point for investors, it has adjusted its expectations for the stocks' near-term price potential. The bank's top picks for the sector are Melco Resorts & Entertainment (MLCO.US), with a 'Buy' rating and a US$9.4 target price, alongside the newly upgraded Sands China.

Macau GGR Growth Forecast Held at 5% for 2026

Underpinning the bank's positive long-term view is a stable forecast for Macau's gaming industry. UBS reiterated its projection for a 5% year-over-year increase in Gross Gaming Revenue (GGR) for the full year 2026. The bank's analysts believe solid demand demonstrated year-to-date supports a sustainable growth trajectory.

Growth is expected to be concentrated in the first half of the year, with an approximate 8% year-over-year increase forecasted for H1 2026. The growth rate is projected to moderate in the second half, slowing to about 3% year-over-year. This outlook provides a foundational basis for the 'Buy' ratings, even as specific stock valuations are being tempered.