On Tuesday, BofA Securities updated its financial model for Marriott International (NASDAQ:MAR), resulting in a new price target for the hotel giant's shares. The price target has been increased to $300 from the previous $250, while the firm has decided to maintain a Neutral rating on the stock. The update comes as Marriott trades near its 52-week high of $290.43, having delivered an impressive 26% return over the past six months.
The adjustment by BofA Securities comes after a thorough review of Marriott's third-quarter 2024 results and revised operating assumptions. These include expectations for revenue per available room (RevPAR) growth, net unit growth, and non-room fees.
The new price target represents approximately 18 times the estimated 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA), which is at the upper end of the historical range for the company. According to InvestingPro data, Marriott maintains impressive gross profit margins of 82%, with current EBITDA standing at $4.1 billion.
The revised target also factors in a slight decrease in the multiple from the current level of around 19 times, while still being supported by anticipated growth in credit card partnerships and a net increase in room additions that aligns with the midpoint of the company's guidance.
As a consequence of the updated model, the forecasted earnings per share (EPS) for the fiscal year 2024 have been lowered to $9.25 from the prior estimate of $9.38. Conversely, the projection for the fiscal year 2025 has seen a slight uptick, with the EPS now expected to be $10.69, up from the previous forecast of $10.60. The new estimates reflect the analyst's adjusted outlook based on Marriott's recent performance and market conditions.
In other recent news, Marriott International has witnessed a series of financial adjustments and projections from various analyst firms. TD (TSX:TD) Cowen maintained a Buy rating while adjusting the price target from $295.00 to $283.00, reflecting Marriott's third-quarter performance and future expectations.
BMO (TSX:BMO) Capital Markets, noting Marriott's cost-saving initiatives, increased the price target from $255.00 to $265.00, maintaining a Market Perform rating. Mizuho (NYSE:MFG) Securities raised the price target to $246.00, maintaining a Neutral rating, expecting an improvement in fee growth in 2025.
Baird increased the price target from $258.00 to $264.00, keeping a Neutral rating, citing expected improvements in Marriott's organic net unit growth in 2025.
Goldman Sachs (NYSE:GS) raised the hotel chain's price target from $267.00 to $280.00, emphasizing Marriott's new cost-saving initiative expected to generate $80-$90 million in savings next year. These are the recent developments in Marriott's financial landscape.
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