On Wednesday, Goldman Sachs initiated coverage on Marriott International (NASDAQ: NASDAQ:MAR) shares with a positive outlook, assigning a Buy rating and setting a price target of $267.00. The firm's analysis suggests a potential 15% increase in stock value over the next 12 months, anchored by several key factors that could drive the company's performance.
The firm anticipates that the deceleration in Revenue per Available Room (RevPAR), a key performance metric in the hotel industry, has already been factored into the current stock price. However, they identify a continuing recovery in business and group travel as a potential source of additional growth for Marriott.
The firm notes that Marriott's portfolio leans heavily towards full-service, luxury, and urban hotels in the United States, which are sectors expected to see a more significant recovery in the latter stages compared to leisure travel.
The analysis further highlights that while leisure travel trends have shown signs of stagnation, the business travel segment is still in a phase of recovery. This aspect positions Marriott favorably as the market continues to rebound from the impacts of the pandemic.
Goldman Sachs also points to Marriott's business segmentation as a strength, with a notable emphasis on higher-end leisure, accounting for 43% of its rooms. The firm anticipates this segment to demonstrate resilience, especially in comparison to lower-end consumer travel, should there be any weakening in consumer spending.
The coverage initiation by Goldman Sachs reflects a confidence in Marriott International's ability to capitalize on the ongoing recovery in the travel industry, particularly in the business and luxury segments where the company has significant exposure. The $267 price target set by the firm represents their expectation for the stock's trajectory in the context of these industry dynamics.
In other recent news, Marriott International has seen a series of noteworthy developments. The company's shares received an upgrade from a Bernstein SocGen Group analyst, citing Marriott's undervaluation and potential growth catalysts. The analyst set a new price target at $262.00, suggesting a positive outlook for Marriott's stock.
Marriott also entered 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 move is projected to boost Marriott's net room growth to between 6 to 6.5 percent by 2024.
However, Citi and Mizuho maintained a neutral stance on Marriott's stock, adjusting their price targets due to various concerns. Citi's reassessment led to a slight increase in the projected operating earnings per share (EPS) for the third quarter of 2024, but a downward revision for the full year 2024 operating EPS.
Marriott also issued $1.5 billion in new debt securities, with net proceeds totaling approximately $1.48 billion, intended for general corporate purposes. Furthermore, the company announced a temporary suspension of trading under its employee benefit plans due to the Marriott Retirement Savings Plan transitioning to a new plan recordkeeper.
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. These are among the recent developments concerning Marriott International.
InvestingPro Insights
As Marriott International (NASDAQ: MAR) receives a favorable outlook from Goldman Sachs, real-time data and insights from InvestingPro provide additional context for investors considering the company's stock. The InvestingPro Tips highlight that Marriott's management has been actively buying back shares, which can often be seen as a sign of confidence in the company's value. Furthermore, the company's impressive gross profit margins, which stand at 81.77% over the last twelve months as of Q2 2024, underscore its strong operational efficiency.
InvestingPro Data indicates that Marriott has a market capitalization of $66.33 billion and is currently trading at a P/E ratio of 23.34. The company's revenue has grown by 8.34% over the last twelve months, as of Q2 2024, showcasing its ability to expand financially. However, investors should note that the stock is trading at a high P/E ratio relative to near-term earnings growth, with a PEG ratio of 1.69 as of Q2 2024, suggesting that the stock's current price may already reflect expectations of future growth.
For those interested in further insights, InvestingPro offers additional tips on Marriott International, which can be accessed for more detailed analysis and investment strategies. As of the latest update, there are 10 additional tips listed on InvestingPro for Marriott International, which can be found at: https://www.investing.com/pro/MAR.
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