Melco Crown stock drop poses buying opportunity, analysts say

    The recent decline in Melco Crown’s stock may present a good buying opportunity, research firms including Sterne Agee and Goldman Sachs say. The company recently reported a 31 percent increase in Q1 property EBITDA to $388 million. Goldman Sachs reiterated its buy rating on Melco, but raised its share price target to $48 from $47.9. “Post the recent correction, the stock valuation looks attractive, trading at 14.5x 2015E P/E and 9 percent free cash flow yield,” it said. Sterne Agee said it was raising its 2014 EPS estimate to $1.77 from $1.72, mostly due to higher mass growth assumptions. “We believe MPEL will renew a march toward our price target,” it said, adding that’s an upside of some 78 percent from recent market prices. Sterne Agee said Melco’s recent share price decline was more a factor of “peripheral distractions,” which have been sensationalised by the media, than any fundamental change in its business model.