On Thursday, BMO Capital Markets adjusted its price target for Marriott International, Inc. (NASDAQ: NASDAQ:MAR), raising it to $240 from the previous $235. The firm maintained its Market Perform rating on the stock. This change comes after Marriott reported its first-quarter results, which presented a mix of positive and negative outcomes.
Marriott's first quarter showcased mixed results, with the company experiencing an increase in fees but only meeting expectations in terms of EBITDA and falling short in earnings per share (EPS). In the United States, Revenue per Available Room (RevPAR) growth was modest at 1.5%.
However, international markets showed more robust growth, with an 11% increase, despite a slowdown in China. The strength in markets outside of China is expected to continue in the short term, supported by the benefits of a weaker U.S. dollar on outbound travel.
For the year 2024, Marriott's guidance on RevPAR and Net Unit Growth (NUG) remains unchanged. Nevertheless, the company has raised its projections for EBITDA and EPS due to improved fee revenues. BMO Capital's commentary highlighted these adjustments, noting the positive impact of better fees on the company's financial outlook.
Despite the improved fee outlook and strong international market performance, BMO Capital views the current valuation of Marriott shares as balanced. The firm points to the ongoing normalization of travel demand and the stock's trading at 16 times the 2024 estimated enterprise value to EBITDA (EV/EBITDA) ratio. This assessment suggests that the risks and rewards of investing in Marriott stock are evenly matched at this time.
Investors and market watchers will continue to monitor Marriott's performance as the travel industry adapts to changing global economic conditions and consumer travel habits. The updated price target reflects BMO Capital's latest evaluation of Marriott's financial prospects and market position.
InvestingPro Insights
Marriott International, Inc. (NASDAQ: MAR) has been demonstrating a strong financial performance, as reflected in the real-time data from InvestingPro. With a robust gross profit margin of 82.44% over the last twelve months as of Q1 2024, the company's ability to retain earnings from sales after accounting for the cost of goods sold stands out. Additionally, Marriott has been trading at a high revenue valuation multiple, signaling that investors may expect future growth and profitability. This aligns with the fact that analysts predict the company will be profitable this year, which is further supported by a significant revenue growth of 15.44% in the same period.
As for the InvestingPro Tips, two noteworthy points for potential investors are Marriott's aggressive share buyback strategy and its impressive gross profit margins. These factors are indicative of management's confidence in the company's value and its operational efficiency. For those interested in a deeper analysis, there are additional InvestingPro Tips available, offering insights such as the company's moderate level of debt and the stock's low price volatility, which could be attractive to investors seeking stability.
Marriott's current market cap stands at 67.41B USD, and the stock is trading at a P/E ratio of 24.11, which suggests a premium relative to near-term earnings growth. This could be a point of consideration for investors weighing the stock's growth prospects against its current earnings multiple. To explore further tips and gain access to comprehensive analysis, investors can visit https://www.investing.com/pro/MAR and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. In total, there are 11 more InvestingPro Tips available, offering a rich resource for anyone looking to make an informed investment decision in Marriott International, Inc.
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