Why is Melco Resorts & Entertainment stock gaining today?

Melco Resorts & Entertainment shares experienced a 1.9% increase in after-hours trading, driving the stock price to $4.31. This rise was attributed to Citi's decision to initiate coverage of the Macau-focused casino operator, assigning a Buy rating and setting a $9.40 price target. The move reflected strong confidence among analysts that the shares were significantly undervalued at their current prices.

In addition to the Citi call, the stock had already garnered nine buy ratings and four hold ratings, with no sell ratings, creating a bullish consensus. The initiation was particularly significant considering the substantial decline of MLCO from its 52-week high of $9.53, with the stock previously trading as low as $4.06 within the past year.

InvestingPro's valuation estimate of $5.84 further supported the view that the stock had considerable upside potential from its current levels. The institutional endorsement from Citi appeared to invigorate renewed buying interest in after-hours trading, despite the broader market showing minimal directional movement. The S&P 500 and Dow Jones both gained less than 0.1%, while the Nasdaq Composite remained essentially flat.

Notably, there were no major Federal Reserve announcements or substantial macro data releases that influenced sector-wide movements, suggesting that the gain in MLCO was primarily driven by the company-specific factors presented by the Citi initiative. The Citi analysis served as a compelling and high-profile valuation anchor at a time when the stock had been trading near multi-year lows and investor sentiment in Macau gaming had been subdued.

The convergence of a deeply discounted valuation, a strong analyst buy signal, and a relatively low short interest created favorable conditions for a swift after-hours recovery.