Bank of America warns of range-bound trading for Macau gaming despite strong early 2026 GGR
Although the sector continues to generate solid free cash flow, analysts highlighted ongoing challenges, and the impact of external factors on wagering activity.
Macau.- Bank of America Securities has flagged a cautious outlook for the Macau gaming sector, warning that headwinds such as margin pressure, tough year-on-year growth, and uncertain GGR could limit upside for casino shares in 2026, despite robust short-term results.
In its research note published on January 14 and authored by analysts Karl Choi, Ronald Leung, Eric Du, and Candice Zhang, the bank forecast that Macau GGR will remain relatively strong in early 2026, particularly in the first quarter, but the sector may enter a period of range-bound trading as year-on-year comparisons become more demanding halfway through the year.
The analysts noted that much tougher comparisons from June could restrict upside potential, though dividend yields of roughly 4–5 per cent might provide some support for the market.
Although the sector continues to generate strong free cash flow, analysts highlighted ongoing challenges, including limited visibility on sustainable GGR growth, potential adverse changes to licensing fees, competitive margin pressures, and the impact of external factors on wagering activity.
Using US-listed Melco Resorts & Entertainment as an example of the opportunities and challenges facing Macau operators, the analysts project slight quarterly GGR growth in 4Q25, but anticipate a 12 per cent sequential drop in property EBITDA due to normalisation from 3Q25’s high hold and higher operating costs from seasonal factors and major events, including the National Games and Studio City’s 10th anniversary celebrations.
Based on these projections, Bank of America trimmed its price objective for Melco, but maintained a Neutral rating.
