Tuesday, Mizuho made a slight adjustment to the price target for Marriott International (NASDAQ: NASDAQ:MAR), bringing it down to $260 from the previous $263, while keeping a Neutral rating on the stock. The firm's reasoning behind the target change is based on a multiple of 15 times the forecasted EBITDA for the year 2026, which is set at $5.5 billion, slightly below the consensus estimate of $5.8 billion.
The revised EBITDA projections by Mizuho are underpinned by their expectations for Revenue per Available Room (RevPAR) growth and Net Unit Growth (NUG). For the years 2024, 2025, and 2026, RevPAR is anticipated to grow by 3.8%, 2.0%, and 1.6% respectively, while NUG is expected to see increases of 5.8%, 4.7%, and 3.0% in the corresponding years.
The analysis also incorporates a forecast of cumulative Free Cash Flow (FCF) over the next two years, amounting to $4.3 billion. This figure is a component of the valuation model used by Mizuho to determine the price target for Marriott International.
The modest reduction in the price target reflects Mizuho's assessment of Marriott's financial outlook, balancing growth expectations against broader market conditions. The Neutral rating suggests that the firm advises neither a strong buy nor sell position on the stock at this time.
InvestingPro Insights
Marriott International's (NASDAQ: MAR) current financial landscape presents a blend of strengths and potential concerns for investors. With a market capitalization of $68.44 billion and a robust gross profit margin of 81.51% over the last twelve months as of Q4 2023, the company demonstrates a strong ability to retain earnings after the cost of goods sold. This impressive margin is a testament to Marriott's efficient operations and pricing power within the hospitality industry. Additionally, Marriott has been profitable over the last twelve months, with a notable 17.63% revenue growth, highlighting the company's ability to expand its financial base in a competitive market.
InvestingPro Tips indicate that management's aggressive share buybacks signal confidence in the company's valuation and future prospects. Furthermore, Marriott's stock is trading at a low P/E ratio relative to near-term earnings growth, sitting at 21.86 for the last twelve months as of Q4 2023, which could suggest that the stock is undervalued compared to its growth potential. This is reinforced by a PEG ratio of 0.55, indicating that the stock may be a more attractive investment when considering its earnings growth rate.
For those interested in a deeper dive into Marriott's financials and strategic positioning, there are additional InvestingPro Tips available that could provide further insights into making an informed investment decision. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and unlock the full potential of InvestingPro's analytical tools for Marriott International at https://www.investing.com/pro/MAR.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.