Asia stocks edge higher as tech meanders on Nvidia; Hong Kong hit by soft earnings
On Monday, BofA Securities made a notable change in its outlook on Travel + Leisure Co. (NYSE:TNL), shifting the stock rating from Underperform to Buy and increasing the price target significantly from $40.00 to $60.00. The upgrade aligns with the company's strong fundamentals, reflected in its perfect Piotroski Score of 9 according to InvestingPro data, and impressive one-year return of over 33%. BofA Securities' decision reflects a positive stance on the company's prospects, citing several factors for the upgrade.
The analyst at BofA Securities highlighted the improving demand for travel as a key driver behind the upgrade. The travel industry has shown signs of recovery, and Travel + Leisure is expected to benefit from this trend. The firm also pointed out that Travel + Leisure's earnings are now seen as relatively de-risked, suggesting a more stable financial outlook for the company. This stability is reflected in the company's "GREAT" overall financial health score from InvestingPro, supported by strong metrics including a current ratio of 3.84 and an attractive P/E ratio of 8.94.
Another factor contributing to the positive rating is the company's position to gain from a lower rate environment. This financial context is anticipated to be favorable for Travel + Leisure, further supporting the analyst's decision to upgrade the stock.
In addition to the rating upgrade, BofA Securities has adjusted its price objective for Travel + Leisure to $60.00, which represents a substantial increase from the previous target of $40.00. The new price target is based on 7.5 times the firm's estimated 2025 Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), an uptick from the 6.5 times 2024 estimated EBITDA used earlier. This adjustment aligns the price target with Travel + Leisure's long-term historical average trading multiple.
The analyst's commentary provided a balanced view of the timeshare sector by neutralizing exposure with a diversified set of ratings. Alongside the Buy rating for Travel + Leisure, BofA Securities maintains a Neutral rating on Hilton Grand Vacations Inc . (NYSE:HGV) and an Underperform rating on Marriott Vacations Worldwide Corporation (NYSE:VAC). For investors seeking deeper insights, InvestingPro offers comprehensive analysis of all these companies, including exclusive ProTips and detailed financial metrics in their Pro Research Reports, covering over 1,400 US stocks.
Travel + Leisure's stock is anticipated to react to this updated analysis from BofA Securities as the market opens. Investors and market watchers will be keeping a close eye on the stock's performance following this significant upgrade and price target revision.
In other recent news, Travel + Leisure Co. announced that CFO Michael A. Hug is set to retire in the 2025 fiscal year. The company has initiated a search for his successor, considering both internal and external candidates. Hug's departure is not linked to any disagreements with the company's strategies or practices.
Travel + Leisure Co. also declared a regular cash dividend of $0.50 per share for its shareholders. The company reported a strong Q3 2024 performance, with a 24.4% margin on adjusted EBITDA of $242 million and over $150 million in adjusted free cash flow. In addition, the company successfully integrated Accor (EPA:ACCP) Vacation Club, leading to a 2% increase in Gross Vacation Ownership Interest sales, reaching $606 million.
Similarly, Wyndham Hotels & Resorts, Inc. announced a quarterly cash dividend of $0.38 per share. Both companies' dividend declarations are part of their financial strategies, demonstrating their commitment to sharing profits with shareholders. These are among the recent developments for both Wyndham Hotels & Resorts, Inc. and Travel + Leisure Co.
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