On Friday, Bernstein analysts increased their price target on Accor SA (AC:FP) (OTC: OTC:ACCYY) shares to EUR55.00 from the previous EUR48.20, while continuing to recommend the stock as Outperform.
The adjustment reflects a positive outlook on the company's disciplined approach to mergers and acquisitions (M&A) and its predictable nature, which are expected to lead to a rerating of the hotel group.
The analysts anticipate that Accor (EPA:ACCP)'s Revenue per Available Room (RevPAR) will rise by 5% in FY24, aligning with the upper end of the company's guidance range of 4-5%.
This growth is supported by the expectation of normalized RevPAR growth in 2025, due in part to a more extensive events calendar, albeit with smaller-scale events. They project a continued pace with a 3% growth in 2025, which sits at the lower end of the provided guidance range.
Looking further ahead, Bernstein's analysis suggests that Accor's business model operates within a "virtuous circle," which includes 3-4% RevPAR growth and 3-5% Net Unit Growth (NUG), leading to an EBITDA increase of 9-12%.
This growth trajectory is expected to facilitate significant cash generation, enabling the company to conduct share buybacks at an estimated rate of 5% per annum.
The group's expansion, particularly in the Luxury and Lifestyle segment in regions such as the Middle East, has been identified as a key driver of growth due to higher commission rates per hotel.
Additionally, potential changes in Accor's governance structure, specifically regarding the renewal or conclusion of CEO Sébastien Bazin's mandate, are seen as attractive factors by the analysts.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.