BofA Merrill Lynch lifted its target price for Melco International (00200) to HK$20.3 from HK$16.3, and maintained its "buy" rating noting.
The research house raised its 2013/14 EPS for Melco by 6%/3% after factoring in latest estimates and price target change for Melco Crown Entertainment (MPEL)(06883). With more than 95% of its NAV sourced from its stake in MPEL, Melco should share the same drivers, it noted.
BofAML deems MPEL as its top pick in the Macau gaming sector. the house believes it should re-rate and no longer trade at a discount to upper-tier peers such as Wynn (01128) and Galaxy (000027) given its solid execution and strong growth potential.
In addition, City of Dreams' performance is sustainable and solid and there is potential upside from Macau Studio City and the Philippine JV projects.
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