On Thursday, Marriott International (NASDAQ: NASDAQ:MAR) stock received an upgrade from a Bernstein SocGen Group analyst from Market Perform to Outperform, with a new price target set at $262.00.
The decision comes as Marriott's shares have seen a 9% decline over the past six months, in contrast to its competitor Hilton, which has experienced a 7% increase.
The analyst highlighted a significant valuation gap, noting Marriott's current standing at 13 times next twelve months (NTM) plus one EBITDA compared to Hilton's 16 times, despite Marriott having only approximately 1% less EBITDA growth.
Marriott's position in the market has been bolstered by its substantial exposure to the Revenue per Available Room (RevPAR) leading Upper Upscale/international segments.
The analyst also pointed to upcoming catalysts that could further enhance Marriott's performance, including its fiscal year 2025 technology and midscale rollout plans. These initiatives are expected to contribute to the company's growth and enhance its competitive standing.
Additionally, Marriott's strategic partnerships have been recognized as a strong suit, with the company being the preferred partner for MGM and Sonder. This collaboration has led to a Net Unit Growth (NUG) of over 6% for the first time since the Starwood merger.
The analyst emphasized that this growth is notable, especially given Marriott's minimal exposure to the Chinese market, which has been a concern for some industry players.
The recommendation suggests that it is an opportune moment to invest in Marriott, with the analyst describing it as a high-quality name available at a discounted multiple.
The new price target of $262.00 represents a significant potential upside from the company's current trading levels, indicating a positive outlook for Marriott's stock shortly.
In other recent news, Marriott International reported noteworthy developments, including earnings results, strategic partnerships, and financial maneuvers.
The company's second quarter of 2024 saw a 6% year-over-year increase in net rooms and a nearly 5% rise in global revenue per available room. However, Citi and Mizuho maintained a neutral stance on Marriott's stock, adjusting their price targets due to various concerns.
Marriott also issued $1.5 billion in new debt securities, with net proceeds totaling approximately $1.48 billion, intended for general corporate purposes. Additionally, the company announced a temporary suspension of trading under its employee benefit plans.
Furthermore, Marriott entered into a long-term licensing agreement with Sonder Holdings, adding over 9,000 rooms from Sonder's properties by year-end and 1,500 rooms in the pipeline.
This partnership is projected to boost Marriott's net room growth to between 6 to 6.5 percent by 2024. These are the highlights of the recent developments concerning Marriott International.
InvestingPro Insights
Marriott International's (NASDAQ: MAR) recent analyst upgrade is reflected in some of the InvestingPro data, which shows a company with strong fundamentals. With a robust gross profit margin of 81.77% over the last twelve months as of Q2 2024, Marriott outperforms many of its peers in operational efficiency. Additionally, the company's management has demonstrated confidence in its prospects through aggressive share buybacks, reinforcing the positive sentiment shared by the Bernstein SocGen Group analyst.
However, investors should be aware of the potential risks highlighted by InvestingPro Tips. Marriott is trading at a high Price-to-Earnings (P/E) ratio of 22.63, suggesting a premium valuation relative to near-term earnings growth. Furthermore, the stock's price movements have been quite volatile, which could indicate a higher risk for short-term investors. On the positive side, analysts predict that Marriott will be profitable this year, and the company has been profitable over the last twelve months, providing a solid foundation for future growth.
For those considering taking a position in Marriott, the company's market cap stands at $64.08 billion, and it has maintained a healthy dividend yield of 1.11%. For a more comprehensive analysis and additional InvestingPro Tips, interested parties can visit https://www.investing.com/pro/MAR, where 17 more tips are available that could help investors make a well-informed decision.
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