On Tuesday, Truist Securities updated its outlook on Marriott Vacations Worldwide (NYSE:VAC), increasing the price target to $161 from $159 while maintaining a Buy rating on the stock. The adjustment follows revised projections for the company's financial performance in the coming years.
The firm's analyst has revised the 2024 Adjusted EBITDA estimate to $786 million, up from the previous $765 million forecast. Additionally, the 2024 earnings per share (EPS) projection was adjusted to $7.69, a decrease from the prior $8.00 estimate. Looking ahead to 2025, the Adjusted EBITDA estimate has been increased to $816 million from $803 million, with the EPS forecast for that year now set at $8.31, down from the earlier projection of $8.61.
The new price target of $161 is derived from a blended sum-of-the-parts valuation method, applying a 10.4x multiple, which remains unchanged, on the firm's 2025 estimated EBITDA for Marriott Vacations. The stock is currently trading at 7.1x and 6.7x the firm's 2024 and 2025 EBITDA estimates, respectively. For context, before the Covid-19 pandemic, Marriott Vacations' stock typically traded between 6.0x and 13.0x two-year forward EV/EBITDA.
The update from Truist Securities reflects a slight optimism in the growth prospects of Marriott Vacations Worldwide, as indicated by the raised EBITDA projections for the next two years. The firm's maintained Buy rating suggests continued confidence in the stock's performance.
InvestingPro Insights
Reflecting on the updated outlook from Truist Securities for Marriott Vacations Worldwide (NYSE:VAC), investors may find additional context through real-time data and InvestingPro Tips. The company's management has shown confidence in its operations through aggressive share buybacks and has a track record of raising its dividend for three consecutive years, signaling a commitment to returning value to shareholders. Moreover, Marriott Vacations has maintained dividend payments for 11 consecutive years, with a current dividend yield of 3.26% as of the last twelve months ending Q1 2024.
From a financial perspective, the company's P/E Ratio stands at a modest 15.64, with an adjusted P/E Ratio for the last twelve months as of Q1 2024 at 12.44, which may appeal to value investors looking for potentially undervalued stocks. Additionally, Marriott Vacations reported a robust gross profit margin of 57.26% during the same period, demonstrating the company's ability to maintain profitability.
Investors should note that while analysts have revised their earnings downwards for the upcoming period, the company has also experienced a large price uptick over the last six months, reflecting a 28.06% price total return, which may indicate market optimism. For those interested in further insights, there are additional InvestingPro Tips available that could help in making a more informed decision. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the full range of expert tips and metrics tailored to Marriott Vacations Worldwide.
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