On Thursday, Deutsche Bank (ETR:DBKGn) adjusted its price target on shares of Accor SA (AC:FP) (OTC: OTC:ACCYY), bringing it down to €47.00 from the previous €48.00. Despite this reduction, the firm maintained its Buy rating on the stock. The rationale behind the adjustment was attributed to a fine-tuning of revenue and EBITDA forecasts for the years 2024 to 2026.
Accor (EPA:ACCP)'s unique geographical presence was highlighted as a key factor that could enable the hospitality group to outperform its competitors in terms of Revenue per Available Room (RevPAR) growth. Deutsche Bank's expectations for Accor's FY24 RevPAR growth remain around 7%, which is notably higher than the group's own guidance of 3-4% and the consensus estimate of 4.5%.
However, due to a more conservative approach to operating leverage, Deutsche Bank has made slight revisions to its top-line expectations for Accor, decreasing them by 0.3% to 0.6%. Additionally, the bank's EBITDA predictions have been modestly reduced by approximately 2%.
Despite these downward revisions, Deutsche Bank anticipates that Accor will continue to enhance its EBITDA margin by 70-110 basis points annually from 2023 through 2026. This outlook suggests a positive trajectory for the company's profitability over the next few years.
The adjustments reflect Deutsche Bank's efforts to refine its expectations for Accor's financial performance, taking into account a range of factors that could influence the company's operational efficiency and revenue growth.
In other recent news, Accor has been upgraded to Overweight from Equalweight by Barclays (LON:BARC), citing the hospitality company's notable resilience in its revenue per available room (RevPAR) trends and potential for earnings growth.
The upgrade comes despite Accor's stock underperformance over the past year, which has resulted in a valuation 34% lower than its competitor, InterContinental Hotels Group. This underperformance is notable given Accor's strong RevPAR trends, bolstered by its significant presence in the Middle East and Asia-Pacific excluding China, and limited exposure to the U.S. and China markets.
Barclays anticipates that Accor's four-year plan will yield an earnings per share compound annual growth rate comparable to that of IHG (LON:IHG), around 15%, inclusive of the impact of share buybacks.
The firm also believes that if Accor's management successfully executes its EBITDA strategy and cash return plans, the company's shares could see substantial re-rating in the next one to two years.
Other factors that may contribute to Accor's share performance include potential self-help catalysts such as the sale of its stake in AccorInvest and a possible division of its Luxury & Lifestyle segment.
InvestingPro Insights
Accor SA (OTC: ACCYY) is currently attracting attention with its financial performance and market valuation. The company is trading at a P/E ratio of 17.57, which is appealing when considering its near-term earnings growth. This is further underscored by an adjusted P/E ratio for the last twelve months as of Q4 2023 sitting at 16.4. Additionally, the PEG ratio, which measures the stock's price relative to its earnings growth rate, is notably low at 0.27, indicating potential undervaluation relative to its earnings growth prospects.
With a solid revenue growth of 19.7% in the same period, Accor demonstrates a robust increase in sales. Moreover, the company has been able to maintain a healthy gross profit margin of 20.95%. Investors may also find comfort in the fact that Accor operates with a moderate level of debt and that analysts predict the company will be profitable this year, a continuation of its profitability over the last twelve months.
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