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Melco (MLCO) Surges 25.5%: Is This an Indication of Further Gains?

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Melco Resorts (MLCO - Free Report) shares soared 25.5% in the last trading session to close at $6.65. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 9.9% loss over the past four weeks.

Shares of Melco Resorts & Entertainment appreciated after Macau officials indicated that COVID-19 travel restrictions are likely to be lifted.

This casino company is expected to post quarterly loss of $0.56 per share in its upcoming report, which represents a year-over-year change of -30.2%. Revenues are expected to be $305.79 million, down 31.5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Melco, the consensus EPS estimate for the quarter has been revised 0.9% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on MLCO going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Melco is part of the Zacks Gaming industry. Playtika Holding (PLTK - Free Report) , another stock in the same industry, closed the last trading session 6.8% lower at $9.62. PLTK has returned -5.5% in the past month.

For Playtika, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.20. This represents no change from what the company reported a year ago. Playtika currently has a Zacks Rank of #3 (Hold).

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