On Monday, Mizuho Securities revised its outlook on Vail Resorts (NYSE:MTN) shares, reducing the price target to $222 from the previous $231 while keeping an Outperform rating on the stock. The adjustment comes ahead of the company's fourth-quarter earnings report, set for next Thursday, with a particular interest in the guidance for the 2024/2025 season.
In June, Vail Resorts reported a decrease in pass sales, with units down approximately 5% and revenue up around 1%. Specifically, pass sales for Australia saw a significant drop of 22% in units, attributed to historically poor weather conditions. The firm's analysis includes an examination of the various factors influencing the 2023/2024 season and the rationale behind rebuilding the guidance for the next season.
The analyst from Mizuho highlighted two major industry-wide challenges: adverse weather in the 2023/2024 season potentially reducing the number of new pass buyers for the upcoming season and structurally higher lodging rates. North American ski market Average Daily Rates (ADRs) have risen by more than 30-40% compared to 2019, which could affect the perceived value of a pass for destination customers who are currently the primary incremental buyers.
The firm suggests that the market may be underestimating the impact of the poor weather in the previous season on Vail Resorts' performance. As the company prepares to release its fourth-quarter results and provide guidance for the future, these factors will likely be important considerations for investors and analysts alike.
InvestingPro Insights
As Vail Resorts (NYSE:MTN) approaches its fourth-quarter earnings report, it's important to consider some key metrics and insights that could impact investor perspective. According to InvestingPro data, Vail Resorts currently holds a market cap of approximately $6.96 billion, with a P/E ratio standing at 25.24.
The company has demonstrated a modest revenue growth of 0.1% over the last twelve months as of Q3 2024. Despite a challenging season, analysts predict the company will remain profitable this year, a sentiment backed by the company's history of profitability over the last twelve months.
InvestingPro Tips highlight that Vail Resorts has been trading at a high P/E ratio relative to near-term earnings growth, which may raise questions about its valuation. Moreover, the stock is noted for its low price volatility, which could be a reassuring factor for investors looking for stability. For those interested in income-generating investments, it is worth noting that Vail Resorts has maintained dividend payments for 14 consecutive years, with a dividend yield of 4.8% as of the latest data.
For investors seeking more detailed analysis and additional insights, there are 7 more InvestingPro Tips available that can provide a deeper understanding of Vail Resorts' financial health and market position. These tips can be accessed through the InvestingPro platform.
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