On Monday, CFRA, a prominent financial research firm, revised its price target for Vail Resorts (NYSE:MTN) shares, reducing it to $191.00 from the previous target of $232.00. The firm has maintained a Hold rating on the stock.
The adjustment reflects a valuation based on a forward EV/EBITDA multiple of 10.3x for the fiscal year ending in July 2025, which is below Vail Resorts' 10-year average of 16.0x. This change is attributed to potential risks associated with inclement weather conditions.
Vail Resorts reported its third-quarter GAAP earnings per share (EPS) at $9.54, which fell short of the consensus estimate by $0.49. The company's revenue for the quarter was $1,283 million, marking a 3.6% increase year-over-year but was $19 million below consensus expectations. Its adjusted EBITDA was $653 million, aligning with consensus, and the margin improved by 70 basis points year-over-year to 50.9%, compared to the 50.0% market consensus.
Despite an increase in resort net revenue and EBITDA, Vail Resorts experienced a decrease in overall snowfall at its Western North American and Australian resorts. Additionally, the total number of skier visits dropped by approximately 8%, with lift ticket visitations alone seeing a 17% decline. The company also reported a roughly 5% decrease in pass sales through late May for the 2024-2025 season, primarily due to fewer new pass buyers.
In response to these challenges, Vail Resorts has lowered its EBITDA guidance for 2024 to a range of $825 million to $843 million. CFRA's report suggests a cautious approach, recommending to remain on the sidelines until there are more positive signs in weather conditions and lift ticket visitation trends.
In other recent news, Vail Resorts has reported an increase in net income to $362 million in its third-quarter fiscal 2024 results, up from $325 million the previous year. Despite a challenging ski season, the company expects its resort reported EBITDA to range between $833 million and $851 million for fiscal 2024. However, pass product sales for the upcoming 2024-2025 ski season have seen a 5% decrease in units, offset by a 1% increase in sales dollars.
The company has also announced plans for significant capital investments, estimated to be between $219 million and $224 million for 2024. Among recent developments, Mizuho, Stifel, Truist Securities, and JPMorgan have all adjusted their outlooks on Vail Resorts. Mizuho and Stifel maintained a Buy rating, Truist Securities sustained a Buy rating, while JPMorgan downgraded the stock rating from Neutral to Underweight.
These adjustments reflect the company's recent earnings report and revised EBITDA estimates for fiscal years 2024 and 2025. CEO Kirsten Lynch reaffirmed Vail Resorts' growth strategy and competitive positioning, highlighting significant growth opportunities in Switzerland and Europe. However, weather conditions and industry normalization are expected to be significant factors for visitation in 2025.
InvestingPro Insights
As Vail Resorts (NYSE:MTN) navigates through its current challenges, insights from InvestingPro provide additional context for investors. The company's stock has been flagged as oversold according to the Relative Strength Index (RSI), hinting at potential investor pessimism that may have pushed the stock price below its intrinsic value. Moreover, Vail Resorts has a record of consistent dividend payments, having maintained them for 14 consecutive years, which could be a reassuring sign for income-focused investors. On the flip side, analysts have tempered their earnings expectations for the company, with six analysts revising their earnings downwards for the upcoming period, reflecting caution in the near-term financial outlook.
From a valuation perspective, Vail Resorts is trading at a high Price/Earnings (P/E) ratio of approximately 23.95, which is above the industry average, suggesting that the stock may be priced at a premium relative to its near-term earnings growth potential. Additionally, the company's Price/Book ratio stands at 6.52, indicating that the market values the company significantly higher than its book value. Despite recent price declines, with the stock trading near its 52-week low and experiencing a significant drop over the last three months, InvestingPro Tips suggest that the company is expected to remain profitable this year, which may offer a silver lining for prospective investors.
For those considering an investment in Vail Resorts, it may be worthwhile to explore the full range of InvestingPro Tips available at https://www.investing.com/pro/MTN. With additional insights and data points, investors can make more informed decisions. To access these valuable resources, use the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, and discover the 10 additional InvestingPro Tips that could further guide your investment strategy.
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